What is the recommended limit for “under-insured” coverage?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Mar 31, 2011

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Insurance Question from Broomall, PA

Asked on 03/31/2011

What is the recommended limit for “under-insured” coverage? I have a business and currently have $1,000,000.00 / per vehicle of Under-insured/Uninsured driver coverage. I was looking to decrease this to $500,000.00 / per vehicle. Is this advisable?

Answer given on April 01, 2011

You have the option of purchasing the minimum limits of liability as your uninsured/underinsured coverage.  However, it is not recommended by insurance agents or companies.  Whenever you purchase a limit lower than the liability limit you carry for yourself, you are usually required to sign a form acknowledging that you understand you have purchased the lower coverage.

If you feel you need $1,000,000 business auto liability limits, you should carry the same amount.  This protects you, and others in the car, in the event someone with low limits causes an accident.  You are then protecting yourself, and others up to the limits you are carrying. 

The cost of uninsured/underinsured motorist coverage is not expensive and well worth its cost.  There are many accidents where there are injured parties and their injuries exceed the other person’s liability limits.  Talk to your agent and find out the difference in cost between the $1,000,000 and $500,000.  It really won’t be much.

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