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Basics of auto liability insurance coverage

  • Cars Explained
  • Xavier Sabastian
  • 6 minutes

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The car insurance policy that offers financial protection for a driver who injures someone else or their property while driving is liability car insurance. Car liability insurance only covers injuries or property damage to third parties, not the driver or the driver’s property. This may be covered separately by other portions of their policy. Bodily injury liability and property damage liability are the two parts of liability car insurance.

Except for New Hampshire, all states require drivers to have some form of auto liability insurance.

liability auto insurance policy

A basic definition of liability insurance coverage

If you are at fault in an accident, auto liability insurance helps cover the costs of the other driver’s property and bodily injuries. The definition of auto liability coverage may appear straightforward, but is it really so? For instance,¬† you’re at a two-way stop a few blocks from your home. You have collided with another driver’s car in the middle of the intersection. What happens next?

In this case, liability auto insurance assists in covering the cost of damage caused by a car collision. In many areas, if a motorist is determined to be at fault in an accident, their insurance company will cover the damage and medical expenditures of any other parties involved up to the policy limits.

Drivers in states with no-fault auto insurance, on the other hand, must claim with their own insurance company first, regardless of who was at fault. However, in certain states, drivers are often obliged to acquire personal injury protection (PIP) coverage, covering their own and their passengers’ accident-related medical bills.

Your car insurance company will get in touch with the other driver’s insurance company to determine who is responsible. If you have liability insurance, your insurer will cover the costs of the driver’s damaged car up to your coverage level, minus your deductible.

Coverage of liability car insurance

There are two forms of liability car insurance:

  • If found to be at fault in an accident, bodily injury liability coverage applies to the other party’s medical expenditures. It may also reimburse lost wages and legal fees if the injured party files a lawsuit in specific cases. An at-fault driver’s bodily injury liability element of their car insurance coverage protects them against being held liable for others’ emergency and ongoing medical expenditures, lost income, or funeral costs. When an accident results in a lawsuit, it also helps cover the policyholder’s legal bills.
  • Property damage liability coverage covers damages to property caused by a covered accident in which you are at fault. It could cover the costs of repairing or replacing the other party’s car and other property damaged in the accident, such as fences, structures, phone poles, and other sorts of property. It also covers damage to other property types, such as fencing, mailboxes, and buildings caused by the policyholder’s car.

Depending on the state you live in, the minimum liability limitations for each of these coverage categories differ. Auto liability coverage will not cover the costs of vehicle damage or human injury. You’ll need comprehensive and collision coverage for this.

limits of liability

Limits of auto insurance liability

Each component of liability auto insurance has a monetary limit. This will vary depending on the level of coverage you select when purchasing the policy. These are some of them:

Limitation of Liability for Property Damage

This is the maximum amount of coverage available for property damage. Any charges over the limit are the fault of the at-fault driver.

Per Person Liability Limit for Bodily Injury

The per-person limit is the maximum amount an insurance company will pay for each person involved in a car accident.

Maximum Liability for Bodily Injury in a Single Accident

The per-accident liability limit is a financial ceiling on how much the insurance company will pay for all people involved in an accident. In other words, the policy will only pay medical expenditures for people wounded in an accident caused by the at-fault motorist up to a certain limit. Any medical expenses over that level would be the responsibility of the at-fault driver.

insurance cover

Is liability car insurance necessary?

A certain amount of liability insurance is required. This is referred to as “minimum coverage.” All states need property damage liability (PDL) and bodily injury (BI) coverage. Personal injury protection insurance, uninsured or underinsured motorist protection, and property protection are all required in some states.¬†

Depending on your circumstances, you can choose a higher amount than the state’s minimum requirement. Consider liability insurance to be the most basic form of auto insurance.¬†Collision and comprehensive coverage and other optional coverages. Medical payments and personal injury protection are not available unless you have sufficient liability insurance.

Each state establishes a minimum amount of liability coverage that a driver must-have. For instance, a state might mandate that all drivers carry liability insurance.

The rates would be as follows:

  • $25000 for single-person injuries
  • $50000 for multiple-person injuries
  • $50000 for single-person death
  • $10000 for property damage

auto liability insurance

Other points to remember about auto liability insurance

Drivers can usually purchase additional liability insurance. This can be higher than their state requirements. It’s often a good idea to do so because medical expenses can be costly. Suppose you have a lot of assets to protect from a lawsuit. In that case, you might consider purchasing an umbrella insurance policy, which can boost your liability coverage on your auto and homeowners insurance policies to $1 million or more.

In addition to the liability coverage required by your state, insurers also offer collision and comprehensive coverage. “Full coverage” refers to insurance that includes all three types of coverage: liability, collision, and comprehensive. A full-coverage policy is more expensive than a liability-only policy, but it protects you from greater financial dangers.

auto insurance quote

To sum up, if you don’t already have liability insurance, you should get it as quickly as possible in order to comply with your state’s minimal insurance requirements. Way.com can help you get a quotation for auto liability insurance. Learn more about Way.com and how to get the right car insurance by taking your lifestyle into account. Why not contact us for a free quote? At Way.com, you get free car insurance quotes from different companies. Not to mention, you can even buy insurance online if you like what you see.

personalized auto insurance quotes


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