My name is Seann McWhorter I’m the agency
principal of Insure Right Insurance Agency located in Lehi, Utah. We are here to talk
about an insurance ins and outs and specifically how to determine that the car insurance liability
limits. Well first of all what are car insurance liability limits. These are generally referred
to on your policy as your bodily injury and property damage liability limits. And there
are varying levels of coverage that are available to you. In essence when you are out on the
road, you are legally liable for any damage that you cause to other members of the public.
If you cause an accident and an individual gets hurt you are liable to pay for their
medical bills, their pain and suffering and lost wages. How do you absorb those, well
basically you know the risk is the same whether you have insurance or not insurance, whether
you have state minimal liability limits or you carry much higher liability limits. The
risk is the same no matter what. If you hit a brain surgeon and break his arm and he can’t
perform surgery anymore. He’s going to sue you and whether you have low limits or high
limits it doesn’t matter, what he’s going to be able to get a judgment against you for.
So when determining the liability limits that you carry on your policy, you really have
to ask yourself some questions. How much of that risk am I willing to obtain myself and
how much of that risk would I prefer to transfer to an insurance company in exchange for premium
dollars. One thing that you have to consider is there is a price involved in the limits
that you choose, and a cost., The price would be the premium that you are paying. The cost
however would be the price that you are paying plus all of the other things that come along
with that. For example if you hit a brain surgeon and you get a million dollar settlement
against you, but you are only carrying state minimum liability limits here in Utah those
are happen to be twenty five thousand per person, fifty thousand dollars per occurrence,
in this situation your policy would only pay out twenty five thousand dollars and you would
personally be legally liable for the nine hundred and seventy five thousand dollars
difference in that judgment. So how much of that, what’s the cost there, the cost would
be whatever the premiums that you are paying plus that nine hundred and seventy five thousand
dollars. So you have to ask yourself am I really getting a good deal when somebody offers
me a cheap auto insurance rate. You have to look at the coverages that you are getting.
And so basically you want to determine how much of that risk you want to transfer. You
can retain all the risk yourself, or you can transfer the risk to the insurance company
by paying a little bit higher premium.