Do I Need Liability Insurance?

| December 18, 2012

wrecked carAccidents happen, and sometimes they are your fault. In such cases, liability coverage helps you pay for damages. Answer the questions below to determine whether you have the necessary liability coverage or if you are paying for car insurance you might not need. DexKnows listings can connect you with an insurance agent for additional information.

Liability insurance basics

State law requires a minimum level of liability coverage, and that level varies by state. Above and beyond that, though, you have control over the amount of coverage you purchase.

Liability insurance pays for damages due to bodily injury and property damages to others when you are at fault. It also pays for your defense and associated court costs if you get sued.

The bodily injury portion of your policy covers medical expenses, pain and suffering and lost wages of those injured, whether in another car or your own. The property damage portion covers damage to property as well as loss of its use.

How much do you make per year? Do you own a home?

When deciding the necessary amount of liability coverage you need, consider your annual salary and net worth. If you are just starting out in the workplace and rent your home, you might not have much to lose in the case of assets, were someone to sue you. On the other hand, if you are well into your career, make six figures and have a healthy savings and retirement fund, you will want to protect those assets with a higher level of liability coverage in your car insurance policy.

How much does liability insurance cost?

Also factor in cost of liability coverage where you live. Areas of the country can differ drastically when it comes to the cost of liability insurance. For example, someone who lives in a rural area likely pays less than someone who commutes to and from a large city each day.

Shopping for liability insurance

Once you have noted your annual salary and calculated your net worth, contact an insurance agent to discuss your needs. Until you know the cost that such coverage will add to your car insurance premiums, it proves difficult to make a final decision as to whether you can afford it, whether you need it or not.

DexKnows listings can connect you with insurance agents in your area. While discussing your needs with an agent, also inquire about whether or not bundling your policies with a particular company will result in savings. You often can save a significant amount by purchasing car insurance and homeowners insurance or renters insurance together.

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Category: Insurance

About the Author ()

Pamela Mitchell spent more than 15 years at daily newspapers such as the Hartford Courant and Houston Chronicle before becoming a full-time freelancer. She now writes about a variety of topics, from dining and entertainment to pets and travel.