Liability Car insurance is the foundation of a decent car insurance policy, which includes numerous forms of coverage. Most states require it, and it’s frequently the most expensive part of the insurance policy.
It’s also an area where you don’t want to cut corners. If you don’t get enough liability coverage, you may find yourself in financial trouble if your vehicle insurance doesn’t cover all of the costs associated with a car accident you caused.
How Does Liability Car Insurance Work?
When you’re at fault in an automobile accident that results in bodily harm or property damage, liability insurance compensates others. Liability insurance also covers legal fees if you are sued as a result of a car accident. These expenses include your legal defense as well as any judgments or settlements obtained as a result of a lawsuit.
Here are some examples of when liability insurance is needed:
- You’re trying to pass the car in front of you while you stare at your navigation system.
- You swerve and collide with another vehicle.
- You hit the gas instead of the brake, and your car collides with a neighbor’s fence.
Liability vehicle insurance protects you if you cause bodily injury or property damage to others in a car accident.
Payment limits for bodily injuries to one person in a car accident and bodily injuries to more than one person in a car accident apply to bodily injury liability coverage. If you are at fault for the incident, this coverage covers medical bills and missed earnings for people in another vehicle.
Property damage liability coverage (PD) has limits on how much it will pay out for property damage you cause in a single accident.
Limits of Liability Car Insurance
If you are at fault in a car accident, your liability car insurance includes coverage limits, which are the maximum amounts your insurer will payout for bodily injury and/or property damage to others.
You have the option of setting your liability limits. Most places require you to have at least a certain amount of liability coverage, but sometimes that isn’t enough to protect you in case of an accident.
Liability car insurance limitations are usually displayed as a three-digit number. It might be expressed as 15/30/5, for example. The first two numbers refer to bodily injury protection, while the third number refers to property damage protection. Here’s an illustration of what 15/30/15 means:
For one person per accident, 15 = $15,000 in bodily injury/death coverage.
30 = $30,000 in bodily injury/death coverage for several people in the same accident.
Property damage coverage of $5,000 per accident.
Liability limits of at least 100/300/100 are preferable, and if you have a lot to lose in a lawsuit, you may want even higher limits. 100/300/100 denotes the following:
$100,000 per person, for each accident, for physical injury.
$300,000 for bodily injuries to multiple people in a single accident.
Property damage per accident is worth $100,000.
It’s important to remember that liability insurance is for the benefit of others.
What Isn’t Covered by Liability Insurance?
Liability insurance does not provide complete coverage. For example, if a criminal takes your car, it is not cost-effective to repair or replace it. Those difficulties may be covered by other types of car insurance.
The following are some of the most frequent types of automobile insurance:
Insurance for collisions
This covers car repair costs (minus your deductible) if you are involved in a car accident, regardless of who is at fault. Collision insurance is an optional coverage, which means you’ll have to pay a higher premium to have it in your policy.
Insurance that covers everything
This covers the cost of repairing or replacing your car in the event of flooding, fires, falling items, hail, animal collisions, vandalism, and car theft. Comprehensive insurance is an optional coverage that will cost you more money if you want to include it in your policy.
Coverage for uninsured and underinsured motorists
These types of coverage pay for medical bills and other expenses for you and your passengers if you are hit by a driver who does not have liability insurance or does not have enough liability insurance.
MedPay and personal injury protection
No matter who was at fault for the accident, this coverage pays for medical costs and other expenditures for you and your passengers. Personal injury protection (PIP) is required in some states, but it is optional or not available in others.
What Is the Cost of Liability Insurance?
Liability insurance costs are determined by several factors, including:
- Speeding tickets and other moving infractions in your driving history
- Your previous claims history
- The quantity of insurance you purchase
- What is your age?
- Gender, marital status, occupation, and credit are some of the other characteristics that differ by state and company (the use of credit to determine insurance rates is prohibited in California, Hawaii, Massachusetts, and Michigan)
- Because each company has its method of calculating rates, auto insurance rates vary greatly. You might be able to get the same coverage from a different carrier for a significantly lower price. That is why comparing auto insurance rates from various companies is a good idea.