The number one question that we get asked more than any other question is:
“How high limits of Insurance should I buy?”
Probably one of the reasons that this is such a common question is because there really is no easy answer. It would be great if we could simply look into a “crystal ball” and tell you what is going to happen to you in the future. That way you could make sure that you are prepared for whatever comes your way. Unfortunately, life doesn’t work that way…
Life is uncertain!
When asked by my friends how high limits they should buy, I always give them the same answer, “If you rear-end a school bus, then $10,000,000 won’t be enough.” While this doesn’t really help out, it does help to illustrate the problem. Life is uncertain. You never know what could possibly happen to you. Most people try to live careful, prudent lives, but calamity can strike any of us at any time.
No one would disagree that a 3,000 pound vehicle driving down the road at 60 m.p.h. can cause an enormous amount of damage. But, even a “simple” accident backing up in a driveway where children are playing can change the course of someone’s life indefinitely.
The important thing is that as a conscientious person you will want to be able to take care of any problem that you might accidentally cause. That is why we buy insurance in the first place. To be able to be financially responsible for any damage that we might inadvertantly cause. There are some particularly pertinent Insurance concepts to introduce here: Maximum Possible Loss and Maximum Probable Loss. While it is POSSIBLE that you could “rearend a schoolbus” and require $15,000,000 or $20,000,000 worth of Insurance, it is PROBABLE that you won’t. Which do you insure for, the possible or the probable? That really depends on your personality, and what you feel comfortable with.
One thing to keep in mind is the litigious nature of our society. While the average “Bodily Injury” Auto Claim is only $10,000, the average of the same type of claim that goes to Jury is $281,000! You may not think that you have much at risk, but if your claim goes before a Jury you may be unpleasantly surprised.
One “rule of thumb” has always been to buy enough insurance to protect your assets. With the skyrocketing value of homes in California lately, many people are finding that they have $250,000 to $500,000 of equity in their home. ALL of that equity is at risk in the event of one single auto accident. While your bank may only require you to carry “minimum limits” on your auto insurance, you should keep in mind everything that you stand to lose in a potential claim.
Long story short: Buy as high of limits as you can afford. That is always the safest course of action.
Feel free to call our agency if you have any questions about Limits, would like to know what it would cost to increase your limits, or would like a quote for any type of insurance.FOLLOW US