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What Should My Liability Limits Be?

Many people have asked this simple question: HOW MUCH LIABILITY INSURANCE SHOULD I HAVE?

This is a serious question many of our clients are concerned with when really trying to protect our families. In coming to a conclusion, let us give you a few pointers. As we discuss these issues, please feel welcome to call and set up an appointment to do a complete review in the office or to do a review over the phone with one of our insurance specialists. We use a state of the art, easy to understand process called the Technical Liability Worksheet to determine what your insurance need is.

For a family, two of the most important things to take into account in determining how much insurance to have are:

1. Assets

a. Equity in home

b. Any other real-estate

c. Personal Property

d. Cash (Savings, Checking, CDs, etc.)

e. Any other assets

2. Income- There is a garnishment potential in the event you are at fault in an accident. The amount of income that can be garnished is determined by the courts. They consider how much you make, how you are paid, and what you need to live. The maximum amount that can currently be garnished in the State of Utah is 55% of your gross wages.

This is generally the process an attorney uses to determine the amount to sue you for in the event you injure or kill his client. Don't be fooled. Attorneys sue people, they don't sue insurance companies. Insurance companies just pay the costs of defense and judgment, if you have adequate coverage.

One very good way to help pay for the increased cost to adequately protect your family (increasing limits) is by increasing your comprehensive and collision deductibles. Carrying adequate limits helps minimize your risk. You compromise a small thing (several hundred dollars) to help protect a large need (a few hundred thousand dollars). An example of this would be the following (*in thousands):

The interesting thing about these two options is they would probably cost about the same. Option 2 might even be less expensive. Option 2 will protect you much better in the event of a large, catastrophic accident. In a small claim you would be out $500 extra dollars. In a large accident, option 2 could save you hundreds of thousands of dollars. Option 2 may not be right for everyone. It is important to know how much protection you need and have a deductible you know you can handle. Often times, you might even need higher liability limits than shown in option2. Many people even need an umbrella.