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3: Analyze Your Circumstances

How Much Insurance is Enough?

House umbrella stopping rainTo answer this question, you need to understand your state’s minimum requirements. However, it’s wise to buy more than the minimum requirement since accidents often exceed this amount. If you are responsible for an accident and don’t carry enough liability, then you could be held responsible for the difference. State minimum liability insurance limits tend to be very low. (e.g., 25/50/15). However, a split limit of 100/300/50 is considered a minimum adequate amount. You also may want to increase your liability limit further with an umbrella liability policy. Talk to your insurance agent for additional information.

Understand the Numbers

When you see three numbers for liability insurance (for example, 25/50/15), read it as:

  • Maximum bodily injury paid for one person in the accident – $25,000
  • Maximum for all injuries in the accident – $50,000
  • Maximum for property damage in the accident - $15,000

State Insurance Requirements

SAM tips

Check this map from the National Association of Insurance Commissioners for links to state insurance departments and this article from the Insurance Information Institute for state minimum requirements.

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