If you are at fault in an accident, the liability coverage on your car insurance can assist pay for the damages to other people’s vehicles and medical bills.
The definition of auto liability coverage may seem straightforward initially, but consider the following real-world scenario: you’re at a four-way stop a short distance from your residence. You’ve driven this route so often that you don’t realize the other automobile should have the right of way. A moment later, you find yourself in the middle of an intersection after colliding with another driver’s vehicle.
When an accident occurs, insurance companies will work together to assess liability (if you live in a no-fault state). It is your liability insurance that pays for the damage to the other driver’s vehicle up to your policy’s maximum, less applicable deductibles. Read over here to know more about Liability car insurance coverage.
Auto liability coverage definition
Your financial responsibility for the injuries and property damage sustained by others as a result of an accident is covered by your liability auto insurance. You’ll need liability insurance if you want to operate a motor vehicle in the United States legally.
Your liability auto insurance policy will be used to pay for damages after an accident you cause. Your liability insurance, known as third-party liability coverage, will foot the bill for any damages incurred (within policy limitations).
To what extent does liability auto insurance protect you?
One type of affordable auto insurance is liability insurance, which helps cover costs if you cause an accident. Both of these things are necessary for its proper functioning:
Liability insurance for bodily harm
This coverage will help pay for medical expenses and other costs incurred due to injuries you cause in a car accident. Medical bills, rehabilitation, and wage loss due to injury are all standard components of bodily injury liability coverage, abbreviated as “BI.” Likewise, it may be used to pay for the deceased’s funeral expenses in the event of an accident.
Liability insurance for property damage
Shorthand for “property damage,” this insurance policy helps pay for repairs after an accident in which you were at fault. It could be worthwhile to rebuild the fence you damaged in the accident or fix the other driver’s car if it was destroyed.
The contents of a car are sometimes included in property damage liability coverage.
Let’s say you and another driver have a little collision, and the other person’s trunk contains $4,000 worth of crystal that is now sparkling rubble. Your property damage liability insurance should cover a new bumper and windshield.
If you are sued following an accident, your liability vehicle insurance will pay for legal representation and related costs.
Coverage for drivers who are neither fully nor adequately insured
Be aware that liability insurance only covers the other party’s losses, not your own. However, if someone hits you and doesn’t have automobile insurance or enough insurance to cover your bills, uninsured and underinsured motorist coverage choices will kick in to help cover the costs. Simply put, you are buying protection against drivers who do not follow the law. Either or both of these forms of insurance may be mandated in your state.
Car Insurance Coverage Limits for Liability
Depending on the coverage you choose when you buy the policy, each part of liability vehicle insurance has a maximum amount of money it will pay out. Among them are:
Limit of Liability for Damage to Property
This limit is the most money that will be paid out for property damage. Any costs that go over the limit are the fault of the driver who caused them.
Liability Limit for Each Person Who Gets Hurt
The per-person limit is the most the insurance company will pay to each person hurt in an accident.
Body Injury Liability Limit per Accident
The liability limit per accident is the most money the insurance company will pay out to all the people hurt in an accident. To rephrase, up to the policy’s maximum, the insured driver will be responsible for paying for the medical expenses of anyone wounded in an accident the insured driver caused. The driver at fault would have to pay for medical costs above that amount.
How much liability insurance do you need for your car?
For legal driving in most places, you’ll need to purchase at least the minimum liability limits required by law in your state. While obtaining the bare minimum required by your state will reduce your insurance premium, it will also increase your risk of a catastrophic loss. Your low cost car insurance company will only pay up to the limits of your policy if you cause an accident. Insurance with lower coverage can run out more rapidly, leaving you responsible for any remaining expenses.
Conclusion
Liability coverage is the bare minimum when it comes to auto insurance. If you don’t have sufficient liability insurance, you won’t be able to buy collision or comprehensive insurance, let alone additional extra coverages like medical payments or personal injury protection.