I just got married and am working on consolidating my wife and I onto one auto insurance policy. One thing I do not understand is why the highest available limit for property damage liability through many of the most popular auto insurance companies seems to be $100k.
If you want a higher limit than that, you have to call them on the phone and have a request put in to a special underwriting team, who may or may not approve it after 3-5 business days of review.
To me, $100k seems really low. New cars are getting expensive. It's not uncommon to see cars from non-luxury brands hitting $50k or $60k MSRP these days. It seems like it would be quite possible to exceed that limit in an accident where an expensive car like a Cybertruck gets totalled out or even 2 different vehicles of around $50k or $60k. Or even a scenario where you get into an accident with a commercial vehicle that's carrying expensive cargo that is damaged beyond repair. It just seems like there are a lot of not-impossibly-unlikely scenarios where more than $100k in property damage could easily result.
Obviously the risk is still pretty low and I don't plan on getting into a situation where we are at fault for >$100k in property damage, but that's the whole point of insurance, to insure against unlikely but potentially catastrophic events. My wife and I have a decent amount of assets that would definitely be at risk in that scenario if we only had $100k in property damage liability coverage.
What am I missing? When I asked about a higher limit on the phone the agent I was talking to made it sound like it was unusual and that it would go to an underwriting team for approval. It made me feel like I will be seen as high-risk for even asking for more than $100k in coverage.
Does the industry just consider the risk of a $100k+ property damage crash much smaller than I do? Is there some sort of regulatory reason that $100k is the highest limit without special underwriting approval? Are wealthy people with a lot of assets who want higher limits using some sort of specialized insurance that I'm unaware of and not going through typical auto insurance companies?
Why are (auto) property damage limits so low?
byu/Eriksrocks inInsurance
Posted by Eriksrocks
5 Comments
They require approval because they need to make sure you don’t want a higher limit for nefarious reasons.
Your shopping with the wrong companies then. There are plenty of carriers that will go up to even $1m on property damage.
Or you could look at CSL which combines bodily injury and property damage into one limit. Most places will do 300k CSL or some even offer the 500k or 1m limits on CSL.
I have never heard having an issue with getting over 100K. I easily got 250/500 coverage right when I asked for it.
Most people that have a 100K vehicle have their own coverage, so they will still have their car taken care of and then the insurance takes the loss. While it does result in higher premiums for all, they view it as better than people not being insured.
Most people would be well covered with 100K as a lot of people do not have a lot of assets. You are just trying to be property insured for your asset level.
Just because they have to send it to underwriting for approval has nothing to do with high risk.
A lot of this has to also do with where you are located. There are places where the vast majority of people carry only the state minimum, and others where they often have high limits.
If you have assets to protect, get an umbrella policy. Some carriers only require underlying auto limits of 100/300 while others require 250/500.
This will be much easier for you if you reach out to independent agents rather than trying to quote online.
Most state minimum limits are insanely low (below $25K). Any time someone wants coverage far above those limits, there will be additional questions asked and likely assets verified.
Or you can work with high net worth insurance carriers that do this all day long. Your best bet is to find an agent to do all of this leg work for you. You’re not paying anything to have them shop it around for you. And they can verify you’re not over- or under-insured.