If you hurt someone in a car crash, can they sue you and take your home? Many people think they can just get a normal auto insurance policy and that will cover them if they get sued. Well, the risk that you run with just selecting any insurance with any amount is that you can expose your house and personal assets if you do not have enough insurance. In this article we will explain what kind of insurance you need, and how much. We cannot guarantee that your assets will not be exposed, but we can give you some tips and examples to show why you should get as much insurance as possible to protect yourself.
Many of us do not think about the type of automobile insurance we purchase until it is time to pay your yearly premium or worse, after you have been involved in an automobile accident. There are several key areas of coverage contained within your insurance policy that deserve your attention. You can easily find what your coverage is on the front page of your policy, which is typically called a “declaration page” of insurance. In this article, we are going to focus on your liability coverage.
What is Liability Coverage and Why Do I Need It?
Liability coverage is that part of your insurance that protects you and your assets in the event you are involved in an accident that is determined to be your fault. New Jersey law requires its citizens that own a car to buy liability insurance covering their vehicle. By law, you must have liability policy limits for injury or death, of at least $15,000 for any one person and $30,000 for two people or more (also known as $15,000/$30,000), caused by a single accident.
Understand that this is only the legally minimum amount of coverage you are required to purchase and is inadequate to protect you and your assets if you are involved in an at fault accident. We recommend liability limits of at least $100,000 for any one person and $300,000 for two people or more ($100,000/$300,000). However, if you have a family and/or assets to protect, please consider liability limits of $250,000/$500,000 or $300,000 combined single limit. If you choose these higher liability limits, your assets will be better insulated from a lawsuit started against you and you will be entitled to purchase an excess or umbrella policy for additional coverage up to $1,000,000 or greater.
How Does This Coverage Work, an Example
An example will illustrate how liability coverage works. On your way home from work you receive a text message from your child. Instead of waiting to complete your trip, you take your eyes off the road. You fail to see that traffic ahead of you has come to a complete stop. You slam into the back of the stopped car ahead causing serious injury to its occupant. New Jersey law places full responsibility on you for striking the rear of a stopped vehicle. The driver ahead suffers an injury to her spine requiring spinal surgery. The surgery is unsuccessful and the driver is permanently disabled from her job. You are served with a lawsuit because the other driver is suing for damages. Assume you only have a liability policy of $100,000/$300,000. What is your exposure?
Because there was only one occupant in the car you struck, the injured driver, you have $100,000 of insurance dollars available to pay that driver for the injuries she is suing you for. If the other driver refuses to accept $100,000 in settlement of her lawsuit, she is legally entitled to proceed to trial and attempt to get a judgment against you. If a jury awards her with $250,000 in damages, you are responsible for the difference between the jury award and your insurance limit of $100,000. You therefore owe the other driver out of your personal assets the sum of $150,000. If you had purchased higher liability limits of $250,000/$500,000 or $300,000 combined single limit, you would have been able to pay the other driver for her damages using insurance dollars instead of your own money and assets.
Get As Much Coverage as You Can Afford, At Least 250k/500k
Please do not underestimate the importance of selecting the appropriate amount of liability insurance coverage. Remember that the coverage protects you, your family and your assets from a lawsuit brought by another who sues for damages from an accident that is your fault. Do not wait until your premium is due or your policy renews to check your coverage. The Law Offices of Vincent J. Ciecka, P.C. is here for you to review your automobile insurance policy at no charge to you. Please call us today at 856-665-5709 and visit us at www.ciecka.com. We will review your coverage and insurance documents for free.