How Much “Property Damage Liability Insurance” Should I Purchase for my Car?

While touring an insurance company’s claim facility, I discovered a display of several different vehicles that became property of the insurance company after they were totaled. At first I saw cars with crushed front ends and flattened roofs — the sort of damage I expected to see on totaled cars. A minute later, we passed a brand new BMW sedan. There were dents and scratches around the wheel well, but nothing else. When I asked how that vehicle could possibly be totaled, the adjuster explained, “With all the sensors in modern luxury cars, even a small amount of physical damage can total a vehicle.”

You heard that right: A fender-bender has the potential to total a $50,000 car.

Given the potential price tag for damaging only one car, let alone the possibility of causing a wreck with multiple cars, I encourage clients to carry at least $100,000 of “property damage liability insurance.” This means the insurance company will pay up to $100,000 for damage to the other person’s property.

My advice: plan to avoid your insurance running out and having to pay out of pocket. Make sure you get at least $100,000 of property damage liability and drive in peace.

James Dick, CPCU, AAI