How much is enough liability insurance?

October 20th, 2015 in Insurance

How much liability is too much?

Trick question. There is no such thing as too much liability when it comes to car insurance. Last year alone, almost two billion dollars in bodily claim injuries were paid out.

2011 = $1.7 Billion

2012 = $1.9 Billion

2013 = $1.9 Billion

If you aren’t carrying the maximum $5 million limit for liability then you may want to re-think your insurance needs. Here is a list of the most common reasons why people don’t increase their liability limits.

There aren’t that many claims:

Between 2009 and 2013 there was an average of 42,500 bodily injury claims in BC with a high of 44,300 in 2012 and a low of 40,500 in 2009. That’s 116 accidents a day or 4.8 an hour involving bodily injury.

I don’t drive my vehicle very often:

While driving less can minimize your exposure it does not make you completely safe. Nobody wakes up in the morning and decides: “Today I’m going to crash my car”. Accidents can happen on a 5 minute trip or a 5 hour journey. Insurance is not for the expected, it’s a safety net for when something goes wrong.

I don’t take it on the Highway or travel at fast speeds:

In 2006, a motorist was stopped at a red light and was rear-ended. The damage to both parties’ vehicles was minor and the defendant stated he did not even feel the accident. The claim settled for $1.3 million dollars. In 2010, an ER doctor was stopped at a light in Whistler, when a transit bus skidded into him at roughly 5 km/h and caused $700 in damage to his vehicle. The doctor was unable to return to work due to a minor brain injury and was rewarded $5.9 million.

If a victim has a pre-existing condition and it is found that your accident aggravated that condition you can also be held liable. Even the smallest of accidents can balloon into massive injury payouts.

ICBC will not pay the full amount.

Every year 99 per cent of injury claims are settled through agreement without a trial, this includes claims where there is legal representation. If a claim does go through the courts, ICBC does not decide the final payout, the court system does.

Worst case scenario I’ll simply claim bankruptcy.

You cannot claim bankruptcy on a personal injury claim settlement taken against you.

Out of all the auto coverages you can purchase, liability is the most important. There is not a single claim that can devastate your financial stability more than a personal injury claim can. Even if you are underinsured by $100,000, you will be responsible for the excess.

Fortunately, increased liability is often the most affordable limit to increase on your auto insurance.