Coverage Gap Calculator Calculator
Frequently Asked Questions
What is a coverage gap in insurance?
A coverage gap occurs when your insurance limits are lower than potential claim costs, leaving you personally responsible for the difference. For example, if you cause $50,000 in property damage but only have $15,000 coverage, you're responsible for the $35,000 gap. Coverage gaps can result in financial hardship if you're sued.
How much liability coverage should I have?
Recommended liability limits are typically $100,000/$300,000/$50,000 (bodily injury per person/bodily injury per accident/property damage). Minimum limits (often $25,000/$50,000/$15,000) may leave you underinsured. Higher limits ($250,000/$500,000/$100,000) provide better protection. Consider your assets and risk tolerance.
What happens if I have a coverage gap?
If you have a coverage gap and cause an accident, you're personally responsible for costs above your insurance limits. This can result in: lawsuits, wage garnishment, asset seizure, and bankruptcy. Your insurance only covers up to your policy limits - anything above that comes from your personal assets.
How can I protect against coverage gaps?
Protect against gaps by: increasing liability limits ($100k/$300k/$50k minimum), purchasing umbrella insurance (adds $1M+ coverage above auto limits), maintaining adequate collision/comprehensive coverage, reviewing coverage annually, and considering uninsured/underinsured motorist coverage (protects you from others' gaps).
