Is there a formula I can use to determine how much liability coverage I need?
My car insurance policy is up for renewal, and I noticed it's a 15/30/50 liability policy. This seems far too low. How do I determine how much coverage I need?
“Generally speaking, the best way to figure your liability coverage is to do the following:
- Take your net liabilities (debt) and subtract them from your assets
- Then, take whatever you make in a year and multiply it by three
- Add these two numbers together
So let’s say you add this all up and it’s $200,000. That’s the bare-minimum coverage you should get for your car insurance. Anything less and you’re playing with fire.”
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