I don’t know if this should be in GQ or IMHO (or even GD), but whatever…
How much auto liability coverage should you have? And does it even matter, since it’s so easy to get really high medical bills nowadays?
In particular, if you’re young and single, is it better just to accept the (small) risk of bankruptcy?
Your limits of liability are entirely a function of what you have to protect and your own sense of civic responsibility. Remember that a “straight bankruptcy” involves surrendering all your non-exempt property to the bankruptcy trustee for distribution to your creditors along with your mortgaged exempt property for distribution to your secured creditors. The extent of your exempt property is generally a function of State statute.
In most States you are required to have some minimum amount of automobile liability insurance. In some states proof of insurance is a condition to get a drivers license or to register a car. In other States driving with out insurance is a crime.
Once you have the minimum insurance coverage, it is relatively inexpensive to increase the coverage. I would also consider buying some sort of umbrella liability insurance as well. Assuming that you have respectable auto liability limits, the additional umbrella insurance is dirt-cheap.
First number: bodily injury liability maximum for one person injured in an accident.
Second number: bodily injury liability maximum for all injuries in one accident.
Third number: property damage liability maximum for one accident.
My state (Texas) requires: 20/40/15 (in thousands of dollars)
If you think about what all these SUVs cost, it’s not hard to see that meeting the minimum insurance requirement to drive will not cover a three car accident where you’re judged to be at fault. I carry twice the minimum (for an approximate 12% premium boost), drive like a grandma on hormones, and am still liable to lose it all to a half-ass trial lawyer.
(I think) in Colorado beatle’s three numbers are 25/50/15. Obviously, you need to have whatever the legal minimum for your state…that’s the GQ answer!
The IMHO answer: It does not cost much more in premiums to hike those limits a bit. I bump mine to the next increment higher ( I know property damage is $50,000, can’t be arsed looking at my policy right now.) For three vehicles, it costs about $30.00 more per month. I could get silly & protect myself against the remote possiblity I might demolish a $350,000 Rolls Royce, but I guess there are limits to my sense of civic responsibility.
While it’s tempting to cut corners and save a few bucks, you could live to regret it later.
A friend of mine driving in Dallas was momentarily distracted one day and accidentally ran a red light, colliding with another vehicle. The family in the other vehicle–particularly the father driving–was severely injured. They sued, my friend’s insurance company after much legal wrangling settled and coughed up the maximum $50,000 on my friend’s policy, though the final judgment was $130,000. My friend had to pay the rest out of his savings. Throughout the legal jockeying, he lost sleep, felt anxious, and constantly worried about what might happen.
He now has a $1 million umbrella liability policy, just in case. (Incidentally, the man hit in the accident has a permanent limp.)
Ask anyone who has ever been through bankruptcy–it’s a phyrric victory.