How Much Property Damage Liability Coverage Do I Need?

Posted in Auto Insurance

June 8th, 2009

If you weren’t born with a silver spoon in your mouth and a sizable trust fund in your name, then you have probably worked very hard to earn every dime and all the toys you have purchased over time. If that’s the case, then proper levels of insurance are required to cover all your material possessions and to fend off any possibility of financial ruin that can happen at a moments notice. One way to defend against possible financial difficulties is arming yourself properly with property damage liability auto insurance coverage. The basic rule of thumb is the more assets you have, the more property damage liability auto insurance you will need.

Property Damage Liability Basics

Property damage liability car insurance is a level of coverage that will kick in if you are found at fault for causing an accident. If you cause a collision resulting in damage to the others drivers vehicle or personal property (like their storefront), your property damage liability coverage will pay to repair or replace the damaged goods up to the maximum limit that you pay for.

State Requirements

This type of car insurance coverage is a legal necessity in most states. The minimums typically range from $5,000-$25,000 coverage, and your needs are based on where you live. Some states may opt to waive this minimum as long as the policy holder has sufficient assets to pay off the minimum property damage liability in cash.

Just because your state may have a $25,000 legally mandated minimum level of property damage liability insurance, it may not adequately provide you with the level of coverage you truly need. Consider if you drive frequently in an area chock-full of luxury vehicles. If you crash into them and cause a collision, the expenses for repair or replacement can far exceed the state’s minimum and you may be held liable for paying the difference out of pocket.

You may also need moreproperty damage liability coverage if you have substantial assets to your name. If you own your home, have cash in the bank, jewelry around your neck and luxury cars in your garage, and if you cause a serious accident, you may have to liquidate all your resources to pay off any property damage you caused and your property damage liability insurance maximum did not cover.

It is advisable to purchase as much property damage liability coverage you can afford in order to protect all the assets you have. If the overall cost is too steep, despite having to meet the minimum coverage of the state, it is recommended that youpurchase the minimum of $50,000 for every vehicle that you own.