Understanding Liability Car Insurance And What Does It Cover

September 15, 2023

5 Mins Read

You might have come across car insurance, home insurance, or general insurance. But have you ever thought about what liability car insurance is? Although the name pretty much implies it, I want my readers to have overall information, which is why I have curated this article.

Liability automobile insurance is a portion of the car insurance policy that offers economic security for a driver who is held responsible for damaging someone else’s property. The inclusion is the driver must be operating the vehicle at the time of damage.

In this comprehensive guide, I will be covering more about liability insurance, its limits, and the things it covers. So, make sure you stay connected!

Liability Car Insurance: What’s All The Hype About?

This form of car insurance mostly aids in covering the damage cost that has been caused by a car accident. In various states, if the driver is proven guilty of causing the accident, their insurance agency has to pay for the other party’s medical expenses and property. There is a certain limit that is set by the insurance policy.

In states having no-fault car insurance, drivers associated with a car accident have to first file a claim with their insurance agency. Here, the fact of who was at fault is generally not considered. In such states, drivers have to purchase PIP or personal injury protection coverage. This covers all the accident-related clinical expenses of the passengers.

Generally, a liability automobile insurance consists of the following two coverage types:

Injuries Made To Body Parts

Under this category of liability car insurance policy, the at-fault driver is covered to save them from being liable for ongoing medical expenses and emergencies of others. This can be anything from income loss to the cost of a funeral. Bodily injury insurance also helps in covering the legal fees of the policyholder when an accident lawsuit is going on.

Damages Made To Property

Property damage liability insurance mostly covers the cost of either replacing or repairing the vehicle. This automobile is most likely to be named under the other driver who has been involved in the accident. It further covers the damage made to other property forms by the vehicle of the policyholder, like buildings or fences.

Limits Of Liability Auto Insurance Coverage

Usually, auto insurance has a limit of dollars dedicated to each component, based on the type of coverage you opt for while purchasing the policy. Now, I know this information is not adequate. That’s why I have segregated liability auto insurance coverage into the following subcategories:

Property Damage Limits

This is considered to be the maximum amount limit for covering the damages done to a property. If the costs exceed the limit, then the at-fault driver becomes responsible for paying it off.

Bodily Injury Limits Per Individual

The per-person liability car insurance is the maximum amount paid by the insurance company to an individual who has sustained injuries in an accident.

Limits For Per-Accident Bodily Injury

Finally, the liability insurance per accident refers to a financial cap. It measures the entire amount due by the insurance company to everyone involved in a particular accident. To put it simply, this policy covers medical expenses for injured people in an accident caused by a faulty driver. However, the total is usually predetermined.

Liability Auto Insurance Examples

Let me give you a brief instance of how liability auto insurance may work even if there’s no-fault insurance. Suppose the motorist had a liability car coverage like the following with their insurance agency:

A liability limit of $60,000 for bodily injuries per person
Bodily injury liability limit of $150,000 per accident

Now, let’s consider the insured getting into an accident that included several people and has been at fault for damages.

Person A has a medical cost of $10,000
For Person B, the medical cost is $20,000
Person C has an overall medical cost of $30,000

Here, the liability car insurance of the at-fault driver will be covered. The reason is that everybody who is involved in this accident has a medical expense lower than $50,000. Additionally, the overall cost for people included was $120,000, except for the faulty driver. This is less than the bodily injury limit per accident.

It is significant to remember that certain policies do not cover any expense that goes beyond the limit of per-accidents, even if per-person limits are not exceeded. The above instance depicts that each individual might have a medical expense of somewhere around $50,000. In such a circumstance, the at-fault driver will be liable to pay for additional charges.

What Are The Requirements For Liability Car Insurance?

Every state fixes a minimum for how much a motorist will have liability coverage. For instance, a state may need all drivers to own liability insurance that can cover one person’s injury of upto $25,000. Now, the amount will keep doubling as people increase. Like, for multiple people, it would be $50,000.

If there is an associated death, the insurance coverage will be of $50,000. In the case of property damage, this amount would become $10,000. Hence, drivers can purchase more liability insurance than what has been mandated by the state. It is usually a smarter decision since medical bills are very pricey.

In case you own considerable assets to safeguard from a lawsuit, you might also choose to purchase an umbrella insurance policy. This might boost the liability coverage for both your car and homeowners insurance policy upto $1 million.

Concluding Words

Liability car insurance coverage is subject to customizations that fit your needs accurately. It can never be one-size-fits-all. Car insurance varies from one state to another and is influenced by factors like the age of the driver, personal driving history, car model, etc.

So, the next time you want to get liability auto insurance for yourself, make sure to communicate your requirements clearly to your insurance agency. With this, I wrap up this comprehensive guide.

But do not forget to communicate your thoughts on this to us. Comment below and let us know what do you think about getting a liability automobile insurance.

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Understanding Liability Car Insurance And What Does It Cover