We get asked this question all the time. We are talking about liability insurance, that amount that you pay to repair the damages and injuries to the party that you hit. Well the bad news is there is no exact answer. It all depends on your assets and your willingness to pay the premiums.
We have had several clients that have had severe accidents. The medical bills for the person and or persons they hit have run into the high six figures and one topped a million. Fortunately all of these clients had the highest limit of auto liability we could buy for them and had umbrella coverage to give them the extra they needed. They were able to settle the claims for the insurance amount and not have to sell assets. This is not to say that by buying a $5million umbrella, you can't lose a lawsuit for $10 million but having the right limits give you the chance to pay the claim with the insurers dollars and not your own.
Sure we have seen people that have been lucky as well. New clients that had not looked at their coverage for years and found out they still only has the state minimum. With their assets, had they been in a serious accident, it would have seriously hurt their finances. We were happy to change that by increasing their liability coverage and were thankful that they did not have an accident that would have taken much of what they had earned.
So to answer the question, You need to looks at your net worth to see how much you have to protect. The next step is to consider how much liability you need to give you protection for at least 98% of all the things that can happen. After that we will shop to get the best plan for you, considering all the information you have given us. There are formulas for liability amounts but they are not 100%, each of us has a different risk profile. We will discuss the potential for loss to help you come to a decision that will offer you the best protection for your dollars.
On a final note, we just want there to be the least possibility of financial failure due to inadequate insurance. Gives us a call and we will work on a plan with you.