No. of Recommendations: 0
EditorialWe asks,

I am not proposing being irresponsible. I am asking what the decision on liability limits is supposed to be based on.

Since I don't think it's possible to buy coverage for infinite liability, and since I am *guessing* it's not appropriate for us to be covered for a million dollars with a net worth of $20K, I was hoping for a straight answer to my question.

We don't own a home or indeed anything of much value.

There's two ways to approach this:

1) One rule of thumb is to have liability coverage equal to twice your net worth. That would be about $40k in your case.

2) The other is what's reasonable. You probably wouldn't want to pay the cost of insuring yourself against the multi-million dollar liability of crashing into a school bus full of children. That's an unlikely event. However, you don't need a very big accident to have $100k to $200k in damages. Maybe $250k liability coverage is a good compromise.

Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.