All states set minimum coverage levels for drivers , but if you are

involved in a serious accident , minimal coverage may not get you off the hook for the full extent of damages .

Your state ’ s goal is to make the required insurance affordable , but in many cases the established minimum coverage is not adequate to cover the liability costs if you are found to be at fault in a costly accident .

Even limits that are several tiers above the minimum may not be adequate for some drivers , because once those limits are exhausted , any remaining damages must be paid out of pocket .

This is important to consider , since the cost of automobile claims has been rising rapidly during the past 10 years for a few reasons :

• More distracted driving has caused an increase in deadly accidents .

• The cost of medical care to treat injured people has skyrocketed .

• Modern vehicles have loads of expensive technology , which if damaged , is costly to replace or repair .

Bankruptcy is the first thought that comes to mind for people trying to avoid paying excess damages , but bankruptcy does not come without problems . It will probably hurt or even eliminate your chances of getting credit in the future ; even if credit can be obtained , it will cost you a lot more and come with conditions .

Because the costs and lost opportunities that result from bankruptcy are significant , it ’ s not an option most people want to or should choose . For that reason , let ’ s instead look at your obligations and how to minimize your risk of having to pay for damages that could be covered by higher liability limits .

Consider the following example : You have an auto policy with a liability limit of $ 100,000 . One afternoon , your car ’ s brakes fail and you rear-end the car in front of you with very high impact , paralyzing the driver .

Once your limit has been paid by the insurance company , it becomes your obligation to pay for any further damages . In the example above , if the injured party is justified in asking for $ 3 million , your insurance company would pay the $ 100,000 for which you are covered , and you would then be expected to pay the remaining $ 2.9 million .

Alternatively , the injured party could take you to court , which could easily cost you hundreds of thousands in legal fees in addition to any judgment granted to the plaintiff . Even if you file bankruptcy at that point , if you have assets , you would have to pay what you have and possibly lose everything . Your wages also may be garnished to pay any judgment .

In any case , not having adequate liability , let alone minimum limits set by the state , is not really a solution .

IN West Jefferson Hills Winter 2020 | Page 13

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Losing Everything Due to Inadequate Auto Liability Coverage

All states set minimum coverage levels for drivers , but if you are