You should have as much property damage coverage as you can comfortably afford, ideally enough to cover your assets in case you are sued after an accident. At the very least, you need to have your state’s minimum required amount of property damage liability insurance if you cannot afford higher limits.
State minimum requirements tend to be pretty low for property damage liability coverage since the average claim for property damage is only around $4,000. However, you should always consider the worst-case scenario when determining insurance limits.
For example, a new car costs an average of $36,000. If you total someone’s new car and you’re only carrying $4,000 in property damage coverage, you will be responsible for the remaining $32,000. That driver can also sue you for that amount. Because of this, you should always carry enough liability insurance, both property damage and bodily injury, to cover your assets and prevent financial ruin if a serious accident occurs.
So, if your net worth is $100,000, it’s recommended that you purchase $100,000 in property damage liability coverage. If your net worth is higher than the limits available to you, you can supplement your liability insurance with an umbrella policy.
To learn more, check out WalletHub’s guide to property damage liability insurance.
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