liability insurance also called auto liability coverage is a type of car insurance that serves as your safe ticket during an accident where you are at fault and several damages are done.
Liability is another word for responsibility. This means the insurance coverage helps you take responsibility after an accident caused by you.
Car Insurance Liability Coverage
Whether you crash into another car, crash into a pedestrian, or bring down your neighbor’s fence, so long you are the cause you have to be legally responsible. Liability insurance comes in handy at this point to help you foot the bills and solve problems caused by your driving.
It pays for the damages you cause others during an accident and also protects you financially if you happen to be sued by those you caused damages.
It can help to cover an injured person’s medical bill as well as pay to repair someone’s damaged vehicle. If you are held responsible for any accident, liability insurance quickly comes to the rescue.
However, it is important to note that liability insurance coverage will not pay for your medical bills and repairs, they would only help third parties who happen to be victims of your driving.
What Does Liability Car Insurance Cover?
This insurance covers other people’s expenses as explained above, it has its areas and components as explained below:
Bodily Injured Liability: this component of liability car insurance covers the injuries sustained by someone else because of an accident you caused.
It may include injuries you cause to someone else while driving and damage you cause to other vehicles while driving.
It also covers the expenses for accident-related lawsuits in cases when you are being sued for the pain and suffering caused.
Property damage liability: this component of liability insurance covers the costs paid when you damage other people’s property.
Property damage liability will help you pay for damages whether you destroyed the property in a traffic-related accident or you crash into fences, buildings, guardrails, or road/street signs.
What Liability Car Insurance Does Not Cover
There are several areas this insurance will not cover. The areas are listed below:
- Your medical bills
- Repairs for your damaged car
Liability Car Insurance Limits
This insurance will only pay to its maximum limits when there is an accident. If the damage from an accident exceeds the limits, you will have to pay for it.
Most auto insurance has three liability limits which are always displayed as three numbers on the insurance policy for example 25/50/25.
The 25 stands for $25,000 which is the maximum amount the insurance company will pay for bodily injury liability limit per person.
The 50 stands for $50,000 which is the maximum amount the insurance company will pay for injuries to everyone hurt in an accident. it is called per-accident because there may be multiple people injured in an accident.
The 25 stands for $25,000 which represents the maximum amount the insurance company will pay for total property damage that may include buildings and cars.
How Much Car Liability Insurance Do I Need?
First, it is important to note that liability coverage is mandatory in most states with only a few exceptions.
It is necessary to get a high limit to your liability car insurance to protect yourself and your financial assets in case of an accident.
If you do not have enough limits during an accident, the people you injured may sue you and demand more money and you may end up losing your home while in extreme cases, your wages may be withheld.
To be on the safe side, it is a general rule to ensure your liability insurance covers your net worth so it can be equal to the value of the investment and cash you own.
It is also a very good idea to increase your liability limits above the state’s minimum requirements To be on the safe side.
How Much Will Car Liability Insurance Cost Me?
The rate usually goes up, however, in a recent analysis car liability insurance will cost you about $685 per year.
The rates also vary and can be determined by several factors such as state of residence, driving history, age, credit score, and car make and model.
Why am I not Protected by my Liability Insurance?
The liability insurance is not designed to protect you or your family members, it is simply for third parties you put at risk through your driving.
Your liability insurance only covers them because you are at fault and they are victims of your driving, if you wish for your family and yourself to be covered by your insurance then opt for full insurance coverage.