What auto insurance limits should I carry to protect my retirement funds?
I am in my early 30s and have about $200,000 invested in my 401(k). Right now, I only carry state minimums for my auto insurance, but I know I need to increase my limits. How do I know if I have enough coverage?
“This is a great question and it is wonderful that you are thinking ahead!
When most people think of car insurance, they think about how much money it costs to fix their car, but insurance protects so much more than that.
If you are involved in a catastrophic accident, you could be on the hook for any amount of money your insurance carrier doesn’t cover. For most accidents, the limits of 100/300/50 will suffice.
One of the best-kept secrets in insurance is that increasing liability coverage is pretty inexpensive. Going up to the next limits of 250/500/100 might not cost much at all.
As your assets and 401(k) grow, you can start looking into an umbrella policy. An umbrella policy provides an extra layer of liability coverage for both your auto and homeowners policies.
The underlying limits would need to be at least 100/300, and the coverages start at $1 million. Don’t let that amount scare you—the average umbrella policy only costs around $100 per year! “
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