Insurance is hard to understand…especially when it comes to how much you actually need.
If you’re asking yourself, “how much liability insurance do I need?” you’ve come to the right place.
There are multiple facets to insurance policies, and one that is often overlooked is liability insurance. So before we dive into the specifics of how much liability insurance you need, let’s first go over the basics.
Also called third-party insurance, liability insurance protects you from claims other parties might make in regards to injury or property damage. Liability insurance policies pay third parties, not the policyholders themselves.
In some states—Florida included—you are required to have property damage liability coverage as part of your auto insurance policy. Liability insurance is also frequently required by people who practice medicine or law and product manufacturers. However, these are far from the only circumstances that call for liability coverage.
How much liability coverage is enough for you, and how do you know if a policy suits you? Read on for more information on what liability insurance covers and how it can help you.
When Do You Need Liability Insurance?
Anyone can benefit from liability coverage, but there are a few instances where it’s required and more where it’s heavily recommended.
Auto Liability Insurance
Almost all states require some amount of property damage liability coverage for auto insurance, and Florida requires at least $10,000. If you are found to be liable for damage to another driver’s car, fence, house, or other property, your liability insurance would cover those damages, up to a point.
Florida also requires all car insurance policies to include at least $10,000 of Personal Injury Protection, or PIP, coverage which helps cover medical bills for yourself or your passengers in an accident, no matter who is at fault.
PIP coverage does not, however, cover injuries to the other drivers and their passengers, which is why additional liability insurance can be very beneficial.
If you are a driver for Uber or Lyft or a similar ride-sharing or delivery service, some states will require you to also have additional Bodily Injury Liability coverage, which protects you if another person is injured in or by your car.
While Bodily Injury Liability is not always required, it is useful to have if you are determined to have caused an accident and an injured party, other than yourself, requires lots of medical attention.
In the state of Florida, if you are found at fault for an accident or have committed certain traffic violations, you will then be required to purchase bodily injury liability insurance for the next few years.
Homeowners Liability Insurance
As a homeowner or renter, you want to be protected in case a guest were to be injured on your property. For example, if someone were to slip and fall on your staircase, you could be found liable for their injuries and possible future medical expenses.
Most homeowners liability policies also include worldwide coverage. This means that if you were to bump someone with your bag or shopping cart in a grocery store, your liability coverage would protect you for damage inflicted even though you weren’t in your home.
Business Liability Insurance
Similarly, if you operate a small business, you want the same protection in case a customer were to have an accident in your store that you could be found liable for. When it comes to your employees, liability insurance is part of your overall workers’ compensation insurance policy.
Business liability insurance can also protect your business against financial losses from product defects and recalls.
Other Liability Coverage You May Need
One type of liability insurance that isn’t thought of often is pet liability insurance. If your dog were to bite a guest and the guest requires medical attention, your homeowners insurance might not cover that.
Other liability policies you can obtain are if you own a boat, an ATV, or another recreational vehicle.
Landlords also need liability coverage to protect them in case an appliance or structure causes injury or harm to the property or to one of their tenants or a guest.
How Much Liability Insurance Do I Need?
The first question to ask when deciding how much liability coverage you need is, “What are you buying it for?”
If it’s part of your car insurance, most states have a minimum policy amount. After that, you should ask yourself how often you’re driving, what conditions you frequently drive in, how many passengers you usually have, and more.
Whether it’s property damage or bodily injury coverage, like most insurance policies, these are things you always want to have but hope you rarely, if ever, have to file a claim. This can be where an umbrella policy can be a good idea.
A personal umbrella policy adds extra liability coverage on top of an existing policy and is meant to protect from catastrophic or devastating claims when your standard auto or homeowners insurance policy max has been reached.
An umbrella policy will typically cover medical bills and property damage but not personal belongings or business losses. Umbrella policies are not required, but they are beneficial to anyone.
As a business owner, the amount of business liability coverage you need depends on your number of employees, the size and location of your office space, what your business does, and more. General liability insurance is a good start for many small businesses, but you will likely need more coverage, especially if you are in a particularly risky field.
Ultimately, it’s wise to have as much liability insurance as your budget allows, rather than spending as little as you can get away with. While it may be hard to justify spending the money for problems you don’t currently have, you’ll be very glad you did in the event of a serious accident.
How Much Is Liability Insurance?
The good news regarding liability insurance is, generally speaking, it is not the most expensive insurance policy. As with all insurance types, the amount of coverage, your location, age, and type of policy will affect what you’re paying.
Because umbrella policies are more seldom used, the premiums tend to be lower.
As we’ve stated, insurance premiums can be something of a drain on your monthly finances, but they certainly pay off when it comes time to use them.
Let HLI Find the Right Liability Insurance Coverage for You
At Harry Levine Insurance, we’re here to take care of you. With more than 30 years of experience, we’ve worked with individuals and business owners to find the right insurance coverage in each circumstance.
If you have questions about liability insurance or want to improve your coverage, contact us today and let us find the right protection for you.
