My past two columns outlined mandatory and optional auto insurance coverages offered in Pennsylvania. This one explains how to choose the mandatory coverages.

Remember, the purpose of liability insurance is to protect your assets from being used to reimburse someone’s injuries or property damage. If you have no assets, then you may choose the state minimums of 15/30/5 – $15,000 if you injure one person, $30,000 if you injure more than one person, and $5,000 if you cause property damage.

This may seem like a correct choice, but simply selecting lower limits does not relieve you of your financial and moral obligations. Ask yourself: Do I want to be responsible for my actions?

Assuming you have assets or want to be morally responsible, then I advise you to begin looking at 100/300/100 liability insurance – $100,000 if you injure one person, $300,000 if you injure more than one person, and $100,000 if you cause property damage. If these numbers seem high, remember, a new Chevrolet Tahoe costs $75,000. Look at your assets, meet with your insurance agent, and decide which limits are correct for you.

Every auto insurance policy provides $5,000 in medical payments if you or a family member is injured in an auto accident. The law allows you to purchase more coverage, up to $1 million.

With the passing of the Affordable Care Act, requiring everyone to have health insurance, choosing the lowest coverage would make sense. In reality, however, not everyone has health insurance. If you do not, then you may want higher limits.

The last choice of the mandatory coverages in Pennsylvania is full tort or limited tort. A “tort” is a civil wrong that causes a claimant to suffer loss or harm resulting in legal liability for the person who commits the tortious act, such as a person injuring another person in a car accident.

When you choose full tort coverage, you retain all rights under the law to recover from the person who committed the tortious act. In choosing limited tort coverage, you agree only to seek recovery from the person who caused your loss under certain conditions (which are explained in my last article).

When choosing your tort option, first consider have I chosen the correct coverages if I am the one responsible for the accident. Once you are sure your liability exposure is covered, your medical bills will be paid and your vehicle will be repaired, you can make your tort choice.

On average, the difference in premium between full and limited tort is 15%. This is a small amount for one car with minimum liability. On the other hand, a family with four cars and young drivers may spend hundreds of dollars each year for this benefit.

Choosing full or limited tort is a debatable subject. The law was created to eliminate frivolous lawsuits and help reduce the cost of auto insurance. It has accomplished its goal.

Originally, this series on auto insurance coverage was to run in three parts. It will be expanded to four, when I discuss choosing deductibles and limits for the optional coverages. Deciding on which limits and deductibles to purchase will vary by a person’s assets and liquidity – ability to readily pay.

Bob Hollick is a State Farm Insurance agent based in Washington.

To submit columns on financial planning, investing or business-related matters, email Rick Shrum at

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