How Much Liability Coverage Do You Actually Need? (2026)

The short answer

Size liability to your net worth plus a few years of future income, because a judgment can attach to future wages, not just current assets. For most households that means at least $300,000–$500,000 on home and $250,000/$500,000 on auto, topped with a $1M umbrella.

Why state minimums fail

Many states still set auto liability minimums around $25,000 per person. A single ambulance ride, ER visit, and short hospital stay can exceed that before any lost wages or pain and suffering are counted. Above the limit, the claimant sues you personally.

• Average bodily injury claim severity now runs well above minimum limits in most states.
• Medical inflation has outpaced statutory minimums for decades.
• Legal defence is paid by the insurer only while cover is in force — once the limit is exhausted, defence stops.

The cheapest part of the policy

Liability is inexpensive relative to physical damage cover. Raising auto liability from $50,000 to $250,000 typically costs $10–$25 a month; adding a $1M umbrella costs $150–$300 a year. Compare that to raising collision cover, which is where most premium actually sits.

Work out your own number

Upload your home and auto declarations pages to PolicyPal and we show your current liability limits side by side, flag whether they meet umbrella underlying requirements, and tell you what a serious claim would leave you exposed to.

Frequently asked

What do 25/50/25 numbers mean?

Bodily injury per person, bodily injury per accident, and property damage per accident — in thousands of dollars.

Does higher liability protect my house?

Homestead protections vary widely by state and rarely shield future wages. Liability cover is the reliable protection.

Should I raise liability or lower my deductible?

Raise liability. A high deductible costs you a fixed known amount; inadequate liability is unlimited.