So much of life is about balancing the risks against potential rewards in making the right decisions to impact your future. When determining the right time to increase your liability limits, you must consider the impact it has on a car insurance quote and potentially, your life. Before you can determine when to raise your liability limits and by how much, you must know exactly what liability limits are. There are three different parts to liability insurance coverage and you would be smart to know about all three.
First, understand that liability limits are divided into three sections that are commonly referred to as "BIPD" coverage, meaning Bodily Injury/Property Damage. The first number in the three number sequence is how much your insurance company will pay for bodily injury you cause to another individual and the second number is how much they would pay for all people you cause injury to in an accident. The third number is property damage coverage and that is how much your insurance company will pay for property damage you cause to another vehicle.
For example, if you have "100/300/100" coverage (generally the most recommended liability insurance limits) you would have "100/300" for bodily injury and "100" for property damage. These numbers are in thousands, so this is in essence $100,000/$300,000/$100,000 coverage. Your insurance would pay $100,000 to an individual maximum for injuries you cause, $300,000 for multiple people in one accident you caused and $100,000 total for property damage you caused.
Now, you can see the importance of this coverage is to keep your family from going broke in the event of a terrible accident. As you can imagine, this means that when you get a teenage driver on your policy you should up your liability limits. This will impact your car insurance quote as no coverage will impact your quote like liability limits. Other than adding a teen driver there is really no other obvious time to up your liability limits unless you simply have the money to spend.
In the end your approach to liability limits should be that you should pay according to what your individual situation presents in terms of potential liability. The more expensive the part of town is that you live in the more you should have in liability limits. Simply put, the more expensive the car the more expensive it is to repair, the more expensive it is to repair the more it costs the insurance company. The more it costs the insurance company the more it impacts your car insurance quote and in the end, your wallet.
