Your state’s minimum liability insurance requirement for auto insurance typically will include an amount of coverage for “Bodily Injury” (BI*) to others, that is, the harm you do to other people’s bodies. It will also include their “lost wages” and other economic damage you may inflict on them, for example. If you put someone in the hospital for two months, their medical bills will be “X” amount of dollars, but this will not represent the total amount of damage that you will have done to them and their household.
If they are a high-earning individual, (or even if they are not!) you may be liable for the cost of replacing their income, or the price of replacing their service to their household as well. Even a “stay-at-home” parent, or “domestic engineer” will have their service to their household quantifiable in economic terms. If the injured party must pay to replace that service, then you are responsible for that as well.
What many consumers of auto insurance products do not understand about this coverage is very simply that even though they might “have nothing to lose” right now, (as they often tell me) this may not always be so. So you are in college, and your meals consist entirely of ramen noodles? Your furniture is milk crates and cinder blocks? True enough, no one will want to take those things from you. However, did you plan on going to grad school, maybe law or medical school?
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Then you do have something to lose, that is, your future earnings. A smart lawyer will get a judgment for the damages you cause beyond your insurance coverage liability limit, and you will watch a significant percentage of your earnings go directly from your paycheck to the injured party to satisfy a damage judgment against you, for the next 10 to 20 years.
The marginal cost of increasing your BI limit from the “state’s minimum” to the next level up, or beyond, is often measured in pennies per day, or a few dollars per month, and higher levels of coverage may be the best investment you ever make in your lifetime, if you cause serious injury or damage to someone that exceeds your liability coverage. The moral of this story is to consider your future as well as your present, when you determine your insurance needs today. Additionally, carrying high limits of BI is a crucial rating factor when starting your policy, so this limit should already be high, at 100k/ 300k or better. (See “POI Discount”).