Unless you are in a business or profession that is inherently dangerous to yourself and others, and you require specialized liability insurance, most of us pay for such coverage as aspects of two other types of coverage.
Liability Insurance as Part of Your Auto Coverage
The liability insurance most commonly held is an aspect of your auto insurance, which is required to operated a vehicle in every state except Wisconsin and New Hampshire. State regulations require drivers to have bodily injury liability for single individuals, all people involved in the accident, and property liability. These numbers are expressed in this manner: 25/50/25, which refers to thousands of dollars. The levels vary by state, and represent the minimum necessary to hold a driver’s license and operate a vehicle.
Certainly, if you comparison shop and work to meet the minimum requirements, you can get cheap liability insurance. However, when you consider the high cost of medical care in the United States, which has increased eight-fold since 1980, more liability insurance may actually be less expensive in terms of what is actually paid out in the event of an accident. “Cheap” auto insurance may not cover the injuries of all involved, which could lead to a lawsuit costing hundreds of thousands more.
Remember the High Cost of Medical Care in Setting Liability Limits
When rounded off, the average medical spending per year for an individual in 1980 was $1,000. Now, it’s $8,000+ for routine medical needs in a given year. Emergency and critical care in the aftermath of an accident is exponentially higher. In weighing the route of “cheap” liability insurance, err on the side of more and look for your discounts elsewhere, like lowering your collision and comprehensive coverage if you’re driving a car whose replacement value is greater than its total value due to age.
Other Types of Liability Insurance
All homeowners policies carry some degree of liability coverage for accidents that occur on the property. Apply the same logic in setting your level of protection when weighed against cost. How likely is someone to be hurt while they are on your property? For instance, if you have small children, a pool, and a lot of play equipment in the backyard — features which lead to your kids having friends over — you’d need more liability coverage in case someone gets hurt.
All liability insurance is an assessment of risk imposed on others as a consequence of your behavior or as a consequence of an environment over which you have control. Given both the high cost of medical treatment in this country and the highly litigious nature of our society, don’t scrimp on your liability coverage levels. The money you save there might be just a fraction of what you’ll wind up paying in a lawsuit when something happens outside your control.