Liability Coverage Limits

Liability Coverage Limits:No one can predict exactly how much you would have to pay if you were to cause an accident. Ask yourself how you would pay for any damages exceeding your coverage limits. The higher your limits are, the more likely your policy will be able to pay all of the damages.

•Bodily Injury liabilityHow much coverage you need is a function of the assets you'd like to protect. If you make $30k a year and don't own a home, $50k/$100k should be sufficient. However If you make more than $75k, own a house valued at more than $150k, and have $40k in mutual funds you should consider coverage limits of at least $100k/$300k

How much you'll pay to increase your bodily injury liability coverage depends on several factors, including your age, marital status and driving record. It also depends on where you live. For example, In New York City, where the frequency of bodily injury is higher than in most cities, this coverage would cost significantly more than if you lived in Rochester, NY.

•Personal Damage LiabilityThis coverage will pay for the repair and replacement of the other guy's car or property in the event of an accident. State-required minimums are as low as $5,000, but if you total somebody's Lexus, that won't begin to cover the damage.

You're better off with a minimum of $50,000 for each vehicle you own. And to be truly safe, you should have a total of $100,000 coverage.

•Personal Injury ProtectionThis is definitely one coverage you can skimp on. PIP coverage pays for the medical and funeral costs associated with an accident for you and your family - regardless of whose fault it was. But if you a lready have separate health, life and disability policies, you can probably forgo this one altogether. Check those policies first, but chances are those sort of expenses are covered under another policy you already own.

•Uninsured or Underinsured MotoristThis coverage pays for medical and funeral costs for you and your family in the event you get in an accident with either a hit-and-run driver or a driver who doesn't have enough auto insurance. These policies usually cover bike and pedestrian accidents, too. Given the prevalence of uninsured drivers nationally, this coverage is essential. On average, it costs less than $40 a year for $100,000 worth and will make up for anything your medical insurance doesn't cover.

•Collision & Comprehensive deductiblesHigher deductibles lower your premium but increase your out of pocket expense if a loss occurs.

Collision reimburses you for the full cost of repairs or replacement of your car after an accident. Comprehensive covers you in the event your car falls victim to a natural disaster, vandalism or theft. With either coverage, the lower the deductible you choose, the more the policy will cost you. We recommend that you always choose the highest deductible you can afford ($1,000 is fine). After all, the purpose of insurance is to protect you against big losses, not to make you whole to the last dollar. If you have an older car, you might drop this coverage altogether.

Collision and comprehensive - which can account for 30% to 40% of your t otal premium - are cash-value coverages. Which means if your car i s damaged, the most you'll recoup is the Kelley Blue Book value, which declines rapidly as your car ages. Here's a good rule of thumb: If the cost of your collision and comprehensive is more than 10% of your car's Blue Book value, it probably makes sense to drop these coverages all together and save a tidy sum. With most cars, you should approach this limit as the car turns five years old. Understand, however, that if you eliminate the coverages, you'll have to foot the bill if you get in an accident that's your fault, or if the car is totaled or stolen.

You may be required to carry collision or comprehensive coverage if your vehicle is leased or financed. If not, you might consider dropping this coverage and pocketing the savings on premiums. As your car's value decreases