Knowing when to increase your liability limits

Question from Gregg S. from Carmel:

I tell my clients (I’m a lawyer) all the time about the benefits of increased limits and umbrella policies. I know it’s not costly, but could you approach the benefits from an insurance perspective?

Response from Jamie Ianigro:

Thanks for your note Willis. When we talk about increasing limits, we’re talking about liability limits. Liability limits have become a little bit more confusing because of all the options that are available. Right off the bat, I’m going to take that choice down to a yes or no question. Should you increase your liability limits from the base limits? There are reasons to say “yes” and reasons to say “no.” Let’s start with why you might choose to not increase your limits.

You probably already know the reason to not increase your limits. It’s money. If you’re choosing between putting food on the table and increasing your insurance limits, it’s a pretty easy choice. However, increasing your limits is much less expensive then you may realize. Doubling your limits may only cost a couple of dollars per month after bundling your policies and selecting the proper payment plan.

The main reason to say “yes” to increasing your liability limits is also pretty easy. It’s a great way to protect your assets, your family and yourself. Most states have mandated what the minimum liability limits will be, but those minimum limits are rarely adequate.

A couple of things add to the reasons to make an increase to your liability limits. The first one is inflation. Medical costs have been sky rocketing for the last twenty years and show no signs of slowing. These trends pretty much guarantee that it’s going to be costly if you hurt someone with your vehicle or someone gets hurt on your property. Increasing your limits is a great strategy to prevent these costs from coming out of your personal assets.

One other thing to keep in mind is your level of risk. Increasing your level of risk only adds to the list of reasons you should increase your coverage limits. Keep these questions and others like them in mind when you think about your personal risks:

• Do you drive car pools?

• Do you have multiple drivers in your household?

• Do you have a pool / trampoline / tree house / pond?

• Do you have a boat?

• Do you entertain guests often?

There are many things to think about and plenty of reasons to consider increasing your liability limits. As always, we recommend talking this over with your independent insurance agent to find the correct solutions for YOU.