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Guide explains how to set car insurance liability limits
The article notes that state minimums often fall short of what is needed to cover the full costs of serious accidents and recommends tailoring limits to factors like assets, income, and vehicle risk.
A Yahoo Finance guide breaks down how drivers should think about choosing car insurance liability limits, explaining that these limits cap how much an insurer will pay for covered claims.
It says most states require minimum liability coverage, but those required amounts are often not enough to protect finances after a serious crash, so drivers should review whether the minimums fit their situation.
The article frames liability insurance as the foundational part of an auto policy and outlines two main components: bodily injury liability coverage, which helps pay for others' medical bills and lost wages after an at fault accident, and property damage liability coverage, which helps cover damage to others' vehicles or property.
It also highlights that bodily injury coverage is typically split into separate limits for injuries to one person and for total bodily injury claims when multiple people are hurt, urging consumers to consider their assets, income, vehicle, and risk tolerance when selecting limits.