There are two reasons to have insurance: to protect yourself and to protect those that might be injured by your negligence. If you run into someone, they can sue you and you want to be sure to have enough insurance that you won’t need to declare bankruptcy as a result. If you cause an accident and injure someone in your family, you probably won’t need to worry about them suing you into bankruptcy but the insurance that you buy protects those you love from your negligence.
The answer to the question is a function of what you risk is compared to the cost of the coverage.
What is your risk of loss?
Your risk of loss is a function of your assets. If you have ten million dollars in assets and you cripple someone, they can sue you and you can potentially pay ten million dollars. If you have no assets, you can still be sued to pay for the losses that you cause. But if someone gets an award of ten million dollars, you can go into bankruptcy. If you have lots of assets, you need lots of insurance. If you don’t have lots of assets, then you need to have enough insurance so that someone won’t want to drive you into bankruptcy. In my opinion, the minimum anyone should carry is $100,000 for any individual and $200,000 per accident. It is enough money that a person injured might accept your insurance policy rather than driving you into bankruptcy.
How much does “extra” insurance cost?
Extra insurance is not expensive. Arizona law requires that all drivers carry at least $15,000 of insurance for any person injured and at least $30,000 per accident. Depending upon the company, the maximum policy may be $250,000/$500,000 to $300,000/$600,000. Here are some actual quotes#:
Minimum Policy Limits ($15,000/$30,000#) = $603/year
Maximum Policy Limits ($250,000/$500,000)= $846/year
$1 Million Policy Limit (Umbrella policy#) = $323/year
Every person should have substantially more than a minimum policy just to be a responsible citizen. If you cause a horrible accident, your insurance should be able to pay the victim. It will protect you and it will protect those who might be injured as a result of your bad driving.
Calling your insurance agent and getting the prices for additional protection may be one of the best calls that you can make.