The old saying goes, “accidents happen.” But, when they happen, people are often injured and have lost wages, medical bills and other expenses that must be paid, which can lead to litigation and liability for the person who caused the accident. Luckily, through insurance, you can protect your assets if you cause an accident in Pennsylvania.
The most common type of accident leading to legal liability is a car accident, but other misfortunes can occur like a slip and fall or other injury at your home. In my opinion, the most important type of liability insurance for you to carry is significant car insurance. Pennsylvania law requires that you carry at least $5,000 in Property Damage coverage (which covers vehicles and other things which you might damage in an accident) and $15,000 per person/$30,000 per accident for Bodily Injury coverage (to cover people you might injure in an accident). In my view, you should carry substantially more than the Pennsylvania State minimum because of the likelihood that you will cause more significant damage in even a minor car accident. You should talk with your car insurance agent and financial planner about appropriate limits, but I generally recommend $50,000 for Property Damage and at least $100,000 per person / $300,000 per accident in Bodily Injury coverage.
It’s also important to be covered for liability that you might have arising out of accidents not involving a vehicle. Usually, Liability coverage will be included under your homeowner’s policy. It’s important to make sure that you have this coverage and have it in significant amounts. If you are a renter, you can purchase Liability coverage as part of a renter’s policy or separately.
Finally, it’s important to consider purchasing an umbrella policy to protect you from extraordinary events. An umbrella policy is an insurance policy that kicks in after other coverage is exhausted. For example, if you had car insurance coverage of $100,000 for Bodily Injury and caused a catastrophic injury, you would be underinsured. But, if you had an umbrella policy protecting you, that would kick in after the exhaustion of the car insurance and protect your personal assets.