Liability Auto Insurance Coverage

Posted by Harry Wagner

You do not have to be an auto insurance expert just to have a basic understanding of what you are buying. If you are in the process of buying insurance, understanding even the most simple terms of an auto insurance policy can help you build a comprehensive car insurance policy that will protect you on the road. One of the most confusing coverage options and terms you will come across is liability auto insurance coverage. If you are looking for a simple and clear explanation of liability insurance, here is a straightforward guide designed for the average consumer.

What is Liability Auto Insurance Coverage?

Unlike a majority of the other optional coverages offered by auto insurance companies, liability insurance is a coverage that must be carried by the registered owner of a registered vehicle due to financial responsibility requirements set by state officials. Most other coverages are optional or can be rejected, but because liability insurance protects a third-party, all vehicle owners must carry it.

Liability insurance will pay a third-party if the policyholder causes an accident that leads to damages or injuries. The liability insurance will only pay out if the policyholder is deemed 51% or more at fault for the accident. Liability insurance does not cover injuries of anyone in the policyholder’s vehicle, or damages to the insured’s vehicle. State officials will set the minimum liability limit requirements that all policyholders must comply with. While carrying state liability minimums will satisfy state laws, all consumers should review their needs and select sufficient limits to protect their assets in the event of an accident. If you do not have enough liability coverage to pay for damages or medical bills to treat injuries, the victim does have the right to take you to court to seek additional compensation. This is why carrying high liability limits is in your best interest, especially when you own property or other assets.

How Does Liability Insurance Read on an Insurance Policy?

When you are requesting an auto insurance quote or reviewing your current car insurance policy, you will find that liability insurance limits are broken down into two different categories with their own limits. One of these categories is Bodily Injury, and this coverage will be listed on your policy with limits on a per person and a per accident basis. In most instances Bodily Injury coverage will read 15,000/30,000 if the policy provides limits of $15,000 per person and $30,000 per accident. The second category is Property Damage. As the name suggests, Property Damage will pay to repair third-party vehicles and any other property like poles and fences. Policy limits will be stated on a per accident basis. This means that your policy will only pay up to the limit stated on your policy regardless of how many vehicles are damaged.

Now that you understand how liability insurance works, take time to compare the rates for various limits before you select a policy. In some cases, you can save money and raise your liability limits if you choose the right insurer. Use rate comparison tools, quote several limits, and build a policy that adequately protects you and others.