Authored By: Randall Hart
An auto insurance policy typically includes several different types of coverage. In this post, we’ll focus on liability coverage. Liability coverage pays others for the damages caused in a collision if you are at fault. Liability coverage pays damages for bodily injury and property damage that, absent the coverage, you will owe personally.
Liability coverage is the insurance Louisiana requires before you are allowed to drive. Most states have minimum coverage requirements. In Louisiana, the minimum coverage for bodily injury is termed 15/30. This provides a maximum liability coverage of $15,000.00 per injured person with a maximum of $30,000.00 per accident. The minimum legal requirement for property damage is $25,000.00.
If you injure someone with your car, claims brought against you could be for a lot more money than the minimum coverage required by law. This is especially true for bodily injury claims. There are two reasons why you might consider increasing your liability coverage for bodily injury claims well above the minimum required.
First, the amount of liability coverage you carry should be high enough to protect your assets from seizure/liquidation in the event of an at-fault crash. Often, experts recommend at least $100,000/300,000 in bodily injury coverage- but even that may not be enough. Take your net worth and subtract your exempt assets to determine what a judgment creditor could recover from you personally. This is the amount that is truly at risk in the event you cause an auto crash that injures someone badly. If you have a million dollar tract of land, you could lose it in a lawsuit if your liability coverage is insufficient. The more assets you have, the more you stand to lose. Your liability insurance should be proportional to your assets.
A second reason you might want liability coverage above the minimum is not readily apparent. In Louisiana, many drivers carry the minimum liability coverage or no insurance at all. Approximately 12% of all Louisiana drivers are uninsured, despite the law requiring insurance coverage. If you have a collision that is not your fault with an uninsured or underinsured driver, your damages, your losses, will not be fully compensated unless you have enough uninsured/underinsured motorists coverage (UM coverage). The maximum UM coverage available to you in Louisiana equals your bodily injury coverage limits. If you carry minimum liability coverage (15/30), the maximum UM coverage is also 15/30. To protect yourself from uninsured loses which are not your fault, you might want to increase your liability coverage to obtain higher UM limits, as well.
UM coverage is inexpensive in comparison to liability coverage. Given the chances of bodily injury claims which are not your fault and caused by uninsured or underinsured drivers, carrying UM limits higher than 15/30 makes good sense.