If you own a vehicle or plan to get it, you may have already heard about liability insurance. It is a rather popular type of coverage that offers financial security and protection if a person is found legally responsible for an accident that causes property damage, death, or injury.
Liability car insurance typically applies when someone else is driving your vehicle and causes an accident. In most states, drivers are required to have a minimum amount of liability coverage.
Liability insurance will cover property damage and medical costs incurred by injured parties if you are at fault for a collision. Even though the policy specifics vary among providers, it usually comprises two types of coverage:
- Bodily Injury Liability: covers the medical bills and loss of income of people injured in an accident if you are at fault.
- Property Damage Liability: covers the costs to replace or repair items damaged or destroyed in the accident (damage to vehicles, storefronts, fencing, homes, etc.)
Limits of Liability Insurance
Liability insurance has three categories of coverage limits:
- Property damage per accident.
- Bodily injury per accident.
- Bodily injury per individual.
Example: 25/50/25 means $25,000 is the limit in bodily injury coverage per individual, $50,000 – in bodily injury per collision or accident, and $25,000 – in property damage per collision.
You may also come across insurers offering only a combined single limit (CSL) policy. For instance, you may get a single coverage of $300,000 instead of multiple smaller amounts. Such a policy might be helpful if you need a particular type of coverage with increased limits.
What is not Included in Liability Coverage?
- Property damage and medical expenses exceeding the policy limits.
- Expenses or injuries that you and your passengers experience and sustain during an accident.
- Damages to your vehicle.
If you are interested in additional coverage, consider using comprehensive coverage, collision coverage, and even Personal Injury Protection insurance.
Additional Insurance Policies
- Personal Injury Protection (PIP) will cover medical expenses you and your passengers sustain due to a collision. It might also cover and involve related expenses, for example, income loss.
- Collision coverage will pay for the repairs due to a collision with a building, retaining wall, or tree. Some policies will also cover damage from potholes, hit-and-runs, and rollovers.
- Comprehensive coverage will pay for replacements and repairs caused by an event other than a collision (vandalism, flood damage, objects falling from another vehicle, etc.)
Liability Coverage vs. Full Coverage
Liability insurance only pays for injuries to other people and damages to their vehicles. In contrast, full coverage includes liability coverage and other kinds of coverage to ensure that your expenses are also covered.
Full auto coverage may include personality injury protection, comprehensive insurance, medical payments, and underinsured/uninsured motorist coverage. Full coverage is not required by law, but you may need it if you lease or finance your vehicle.
Do You Need Auto Liability Insurance?
You will likely need some liability insurance to drive in the United States, although laws differ from state to state. But even if you live in a state where liability coverage is not mandatory, you might still need it if you lease or finance your vehicle.
- The ideal way to identify whether and how much liability insurance you need is to contact the Department of Insurance or the Department of Motor Vehicles in your state. Likewise, you can consult with a licensed insurance agent in your area.
An important factor to consider is the total value of your assets. Make sure you will be able to meet the financial responsibilities in the case of a collision.
How to Find the Best Auto Liability Insurance Policy?
Shop around to identify suitable liability insurance. Compare several major insurers to get the hang of it, and then evaluate each shortlisted option’s pros and cons. Alternatively, consult with a local auto insurance expert.
Oleksandr is an expert in deep research. He covers insurance topics across four major insurance verticals – auto, health, life, and home insurance – while taking into account the legal landscape of the state in question. Come rain or shine, you can expect regular quality blogs and timely updates from Oleksandr.