Most Texas car insurance policies may contain up to 7 sections within them. The first section forms the foundation coverage for our car insurance. In fact, it is the only section the state of Texas requires policy holders to carry, and that’s liability coverage.
Liability coverage is designed to pay for damages (repairs or the current value of a totaled vehicle) when you are liable for an accident and found to be at fault. In other words, if you hit another car, truck, or stationary object such as a building, your neighbor’s fence, a traffic sign, or even a pedestrian if pays for medical care and property damage you caused. On most policies, this coverage is referred to as bodily injury property damage or BIPD.
Liability coverage, or BIPD, can be purchased with either split or combined single limits. Split limits are usually represented with 3 numbers such as 30/60/25. The most common split limits sold include:
The amounts represent coverage amounts in thousands of dollars, so 30 equals $30,000, 60 equals $60,000, etc. The first two numbers represent medical coverage which is paid if someone in the vehicle you hit, a pedestrian or another person, is injured and requires medical coverage.
- The first number represents the maximum amount of medical coverage available for an individual’s medical care.
- The second number represents the total medical coverage which will be paid for any one accident if more than one person is injured.
The third number represents the total amount of property damage that will be paid regardless of what the actual total damages are.
Combined single limit coverage is represented with one number. The most common limits are $100,000, $300,000, and $500,000. This one number represents the total available funds to pay for medical care and property damages incurred in a single accident. The benefit of combined single limit, or CSL, coverage is it can be allocated however it’s needed without worrying about maximum limits on a per person basis.
The amount of coverage needed varies by individual and family, and depends on a number of factors related to income, assets, and what you do for a living. If you’re mom or dad have asked to get your own car insurance, you may not be able to afford more than the Texas state minimum coverage, 30/60/25. If you’re a physician, attorney, architect, business owner, etc. and have limits less than 250/500/100, then you don’t have enough coverage. The minimum I recommend for most renters is 50/100/50, and for most homeowners is 100/300/100.
I’ll write more on the amount of coverage I recommend and why in a later post. If you have any questions about your coverage, suggestions, or comments, please share them with me on our Google + Facebook, or LinkedIn pages. I’d love to hear from you!