Many of the people we work with are first-time buyers of a renters insurance policy. Often times this means they’re not familiar with how to judge how much coverage they need. So, we commonly get asked
How much liability should I have on renters insurance? I don’t really have much exposure, and I don’t have any assets that would make me worth suing.
The answer is easy so let’s take a look…
How Much Liability Do I Need On My Renters Insurance?
Very few people give much thought to how much liability coverage they have on their renters insurance. They should, as it’s one of the most important coverage’s on your policy. It’s also easy to determine with a simple formula.
How Much Liability Should I Have On Renters Insurance?
The answer is easy: As much as is available.
Liability on renters insurance is not expensive. Going from $100,000 to $500,000 might cost you twenty dollars or so a year. That’s only two bucks a month. One reason you should max out your liability coverage is because you can.
If you were choosing between two models of cars, one which offered airbags and one which did not, and they were otherwise exactly the same, including the price, which would you choose? The one with the airbags, of course. Anyone would, because it’s safer. What if the airbags added a few dollars to the price of the car? Nothing you’d notice in the monthly payments, but still a small amount. You’d still choose the one with airbags because that’s what’s prudent, and it doesn’t make a real difference to the cost.
Having $100,000 of liability, which is the basic level of coverage on most renters insurance policies, is like having a car with seat belts, but no airbags.
Sure, it will help protect you if the worst happens. But in many situations, seat belts alone are simply not enough. You need the most protection available to keep you and your family safe, so you buy the airbags. Maxing out your liability at $500,000 is the insurance equivalent of side-curtain airbags. There may be a limited set of circumstances that would necessitate those particular airbags, but when you need them you’ll definitely wish you had them.
Recently, a couple caused a fire at a large apartment complex by grilling on their balcony. The building was a total loss.
The lead commercial carrier is suing them for north of a million dollars to recover what was paid out to the owner of the building.
Do you think they’d settle for $100,000 if that’s all you had in liability? Absolutely not. They’re somewhat more likely to cut their losses and accept a settlement of the policy limit if the responsible parties had $500,000 of liability coverage.
How much liability should you have on renters insurance? As much as possible. To find out how little it costs to increase liability limits, contact the insurance experts at Effective Coverage at (800) 892-4308 or click above for free online renters insurance quotes with maximum liability protection. You and your family deserve the best coverage at the best price.