Some of the most common questions I get in insurance revolves around liability limits. Sure, Tennessee requires you to have a certain amount by law. But is that enough?
First, let’s visit this question. What is liability insurance? Liability is the portion of your insurance policy that covers other drivers in an accident that you are deemed at fault, i.e. you rear end another driver, merge into their lane, etc. Liability in no way covers any damage done to your vehicle. The state only requires you to have coverage for other people’s damages and not your own.
So what are Tennessee minimum requirements?
The state of Tennessee requires that every driver have a minimum of $25,000 for any one person injured in an accident, $50,000 for all people injured in a single accident, and $15,000 for any damage done to any property in a single accident. Having these limits will satisfy the state mandate for insurance, but is it enough to cover you and your assets?
Is it enough?
In some cases, sure. It probably could be. If there are no or minimal injuries and minimal damage to another person’s property such as their car, a fence, a light pole, then it might be. But typically, it’s not going to be enough coverage. It’s possible that an individual’s medical expenses will exceed $25,000 and if two people are injured, it can definitely exceed the $50,000 required by law. It’s also possible that the property damage caused by the accident will exceed $15,000. Have you checked the prices of new cars lately? What about trucks? Trucks are expensive. We’re talking $60,000+ for some new trucks.
So let’s run a scenario?
Let’s say you have state minimum liability limits and you hit a brand new 2019 GMC Sierra and total it. If you have state minimum limits and that trucks cost new value is $60,000, your insurance pays $15,000 to the other driver for their truck. That’s a difference of $45,000. Who is going to foot that bill? You are. What if that driver takes an ambulance ride to the ER, is treated by a physician, nurse, nurse practitioner, has three scans done, and must have surgery on their broken leg? That will well exceed the $25,000 you have for medical expenses to one person in an accident.
Let’s talk options.
What are your options when it comes to liability limits? There are a variety of limits that can be written. The next level of coverage up from the state minimum is $50,000/$100,000/$50,000. Our agents are typically going to offer the next increment of $100,000/$300,000/$100,000 or more. The next increment is $250,000/$500,000/$250,000 and that is usually the required limits in order to have an umbrella policy (an extended liability above and beyond your liability limits on your underlying policies). One suggestion is the more assets you have, the higher your limits need to be. The more you have to lose, the more protection you need.
If you feel like your current policy may be inadequate, we offer free reviews and would be more than happy to discuss your policies with you.