Submitted by Bradley A. Hall
Last quarter, I wrote about how you are able to protect yourself and your family members from injuries caused by uninsured and underinsured negligent drivers. But what if the shoe is on the other foot? What if you are now the defendant who ran the stop sign, looked down at the wrong time, or committed some other act which injured another driver, pedestrian, or even one of your own passengers? Do you have enough liability insurance to cover the injured parties’ damages? If not, your personal assets, including your ongoing income, may be at risk.
As we saw last month, a car accident is either the first or second most likely cause of debilitating injury depending on age. Likewise, the most likely reason you will be held liable for someone else’s injuries is you causing an auto accident.
Colorado law requires that automobiles be covered by a minimum of $25,000 of liability insurance. That amount will just about get an injured party to the hospital in an ambulance and a few days in the ICU. If air transport is required, the ride to the hospital is just barely covered. What then about follow-up care, lost wages, and pain and suffering? If you have a minimum limits policy, you may just be on the hook for the rest.
The most common liability limit I see in my practice is $100,000 per person, with a cumulative total of $300,000 per accident. Often times, these limits are selected without much thought as to what is actually at risk. While $100,000 seems like a lot of money, a serious accident can lead to several hundred thousand dollars of damages. If you injure a person making $50,000 per year and she is out of work for 2 years, that $100,000 is gone.
When selecting your liability limits, ask yourself what you need to protect if you hurt someone. Price limits such as $250,000/$500,000 or even a combined single limit policy of $500,000. You will find that the premium is not that much higher than the run-of-the-mill $100,000 policy. And if you think that the $500,000 limit may not be enough for you, consider adding a personal liability umbrella policy. An additional one million dollars of coverage for a couple without kids will only be a few hundred dollars per year. Any good agent will gladly give you quotes on increasing your limits. Don’t wait until after the damage is done.