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If you do not own a home, do you need high liability limits on your auto insurance?

Does owning a home dictate how much your auto insurance liability limits should be?

We recently had a client move their auto insurance to an online competitor.  When clients leave us, we like to have a conversation as to why and what we could do better in the future.  What she told us was a bit surprising.  She stated that the online carrier representative told her that she did not need the higher liability limits on her auto policy because she did not own a home.

They said what?

That’s right.  She was talked into lowering her liability limits to state minimum limits because the rep told her she did not need the higher limits.

The suggestion that individuals who don’t own a home don’t need higher liability limits is misleading. Liability coverage is not solely about protecting physical assets like a home; it’s about protecting oneself from financial devastation due to significant liability claims.

Here’s why everyone, homeowner or not, should consider higher liability limits:

  • Future Earnings at Risk:  Even if someone doesn’t have substantial assets now, a court can order wage garnishment to satisfy a judgment.  This means future earnings could be at risk if involved in a serious accident where they’re deemed at fault and the damages exceed their liability limits.
  • Asset Protection: While a home is a significant asset, it’s not the only one. Savings, investments, personal property, and even future assets can be targeted in a lawsuit.
  • Medical Bills Can Be Expensive: If an individual is found at fault in an accident that results in severe injuries to another party, the medical bills can quickly exceed low liability limits. The at-fault party would then be responsible for covering the excess out-of-pocket.
  • Legal Costs: Legal defense costs can add up quickly, even if the insured is found not at fault. Higher liability limits often mean the insurance company will invest more in the legal defense. This is because they have more at stake.
  • Peace of Mind: Having adequate coverage brings peace of mind, knowing that you’re protected from unexpected financial burdens.
  • Cost to Increase is Often Minimal: In many cases, the cost to increase liability limits is not exorbitant. The additional protection provided is often worth the modest increase in premium.

Evaluate your insurance needs

It’s true that individuals with significant assets, including homeowners, often have more at risk.   Therefore, they might be advised to carry higher liability limits.

But it’s a mistake to think that those without substantial assets don’t also need robust protection. Everyone should evaluate their financial situation, potential future earnings, and risk tolerance when deciding on liability coverage.

Most people think that their biggest asset is their home.  Because that is what we are told by the TV commercials from the realtors, mortgage brokers and investment advisors.  But in reality, our biggest asset is our income and our ability to earn and keep our income.

Think about it.  Someone making $50,000 over the next 30 years will make $1,500,000, assuming no raises.  With cost of living increases, that number could easily double to $3,000,000.

Higher liability limits not only protects your physical assets, but it also protects your future income.

Why contact Huff Insurance?

At the end of the day, insurance is more than just a policy; it’s about securing peace of mind and safeguarding your future.

Huff Insurance has years of expertise and commitment to our clients.  We offer not just coverage, but a partnership in your protection.

Our team goes the extra mile to understand individual needs, ensuring that you’re not just insured, but well-protected.

Whether it’s for your home, auto, or any other valuable asset, reaching out to Huff Insurance is a smart step toward robust and reliable insurance protection

Call us today at 410-647-1111.

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