Find Cheap Auto Insurance Quotes in Your Area
In nearly every state, drivers must carry auto insurance with bodily injury and property damage liability coverage. If you get into an accident, your liability coverage pays for the other driver's medical bills and car repairs.
Minimum limits vary by state, but you'll need to figure out whether you want more coverage. Medical bills resulting from a nonfatal car accident reach $67,000 on average in the U.S.
If you caused the accident, you may have to pay for anything your insurance doesn't cover. At the same time, your state or insurer might impose upper limits on liability coverage — and you also need to make sure you can afford your car insurance premium.
So how can you figure out how much BI and PD you need? Here's what to know.
Bodily injury and property damage limits
First, you should be familiar with how bodily injury and property damage limits work. They are usually written in a shorthand format like this: 20/40/20. Here's what that means:
- The first number represents the bodily injury liability limit per person in the accident.
- The second number represents the coverage limit for the entire accident.
- The third number represents the limit for property damage.
For example, if you had limits of 20/40/20, then you have $20,000 in liability injury coverage per person, $40,000 per accident and $20,000 for property damage. You can read more about the differences between the three here.
What is considered high and what is low?
The lowest state minimum is in California, which requires drivers to have limits of at least 15/30/5. Alaska, on the other hand, requires 50/100/25, the highest in the country. Anything under 30/65/15 is considered low in most states. On the other end of the spectrum, in some states, Geico allows you to carry up to 500/500/100 coverage. Essentially, the amount you should have is somewhere in between those values. Here's how you can narrow it down:
How much do you drive?
Research shows that the more you drive, the more likely you are to get into an accident. If you are a safe driver and you only drive once a week, the odds of you getting into an accident are low. But if you have a long commute to work every day, your chances of getting into an accident are greater — and you should consider increasing your coverage limits.
The car you drive
Some cars are safer than others. A newer car packed with safety features can reduce your chances of getting into an accident, while a car with outdated technology may be less safe. We recommend getting more liability coverage if the type of car you drive might put you at risk.
The type of car itself won't influence the price of BI or PD insurance, but it will affect the cost of comprehensive and collision insurance.
If you cause a car accident, the other driver might be able to sue you, depending on state laws and other factors. Your car insurance will only pay bills up to your policy limits — and if there's a balance left, you might be on the hook for them.
Consider what assets might be at risk in this situation. If you have a high income, for example, another insurance company may sue to make up for the gap in coverage. On the other hand, if you have very few assets, a lawsuit is less worthwhile to pursue. In that case, the injured driver may settle for whatever your insurance company pays out. Thus, if you have a lot to lose, it's best to get more coverage to begin with.
Finally, you have to consider the cost difference between high and low coverage. You might think going from $50,000 to $500,000 in coverage would cost 10 times more — but that's far from the truth. We got a Geico quote from Illinois and found the cost of 50/100/25 worth of coverage is only $140 cheaper per year than 250/500/100 coverage. For just $12 more a month, you can quintuple your coverage. Odds are you won't even need that much coverage, so the price will be even lower for the right amount of coverage you need.
BI and PD coverage are important — if you lack adequate coverage, an accident can cost you thousands of dollars. By carefully assessing the car you drive, how often you get behind the wheel, your assets and the cost of coverage, you should be confident you're getting the right amount. And remember: It's always important to shop around for the best car insurance price. Every insurer has its own formula for setting prices, and there's always one that will provide the amount of coverage you need, at the price you can afford.