How much insurance should a person carry for liability? Property damage is pretty much set by replacement cost calculators and different things, so those really can’t be moved around too much. Liability is an entirely different situation however.

To get the juices going, flip the situation and pretend for a moment that someone hit you and you are injured. Did you have to go to the hospital for this injury? Did you have to have surgery for it? Did you have to miss work for this or even potentially have to change jobs because of this injury? Will you need on-going care or have long term pain as a result of these injuries? Was someone else in the car with you and were they hurt? Are you the only breadwinner in your household? Will you be able to enjoy the same activities you enjoyed before the injury? In the worst case, was someone killed? With all of that in mind, how much do you need to have in compensation to make you whole again? In the case where an injury causes loss of life or limb, the figure most people start with is a million dollars.

A million dollars is a ton of money right? Consider this. I am 38 years old, so lets use my age in this scenario. I have a good 30 years or so left in the workforce before retirement age. A million dollars only gives me 33,333 dollars per year to work with to cover the cost of living, replace my income, cost of doctors visits, initial cost of the injury, possible additional long term medical care for my injuries, and that assumes I am single and have no dependents to provide for. Suddenly, a million dollars is nowhere near enough to cover for all that I have lost because of someone else’s negligence. Do you need more than 33,333 dollars per year to make all your payments and bills, to maintain your current lifestyle? I know I do.

If you chose a million dollars, and you are not insured for a million dollars, you are not carrying enough insurance to meet what you would want if the situation was reversed. The best and easiest way to deal with this is to carry personal umbrella coverage. They are cost effective and deal well with the liability concern most people will have. It is not a 100 percent coverage (nothing in insurance ever is), but it’s the best way to deal with the risk you take on just by driving or living in a place that you are partly or wholly responsible for.

As always, fire away with any questions on the contact us page, and let’s get you covered for what YOU think is appropriate for you.