Liability Insurance: Does It Cover Other Vehicles?

Liability insurance coverage is a type of insurance that protects you financially if you are responsible for someone else's injuries or property damage. It is typically broken down into two categories: bodily injury liability and property damage liability. Bodily injury liability covers the cost of other parties' injuries that you cause when you are at fault in an accident, including emergency care, continued medical costs, and lost wages. Property damage liability covers the cost of damage to other parties' property when you are at fault, including vehicle damage, buildings, guardrails, and fences. It's important to note that liability insurance usually stays with the car, not the driver, and every policy is unique, depending on multiple factors and state insurance laws.

Liability insurance and permissive use

Liability insurance coverage protects you financially if you're responsible for someone else's injuries or property damage during a covered accident or event. In nearly every state, drivers are required by law to carry it in their policies. Liability insurance falls into two categories: bodily injury liability coverage and property damage liability coverage. The former helps pay for bodily injury for which you are legally liable, while the latter helps pay for damage done to another person's or company's property, as well as the loss of use of that property.

Liability insurance typically covers drivers who are named on the policy, such as the policyholder's spouse, parents, siblings, children, and other household members. It may also cover other people not listed on the policy, such as friends or extended family members, if they have the policyholder's consent to drive the vehicle. This is known as "permissive use" and is included in many auto insurance policies. However, it is important to note that permissive use may have exceptions and exclusions, and not all insurance policies include it.

Permissive use applies when someone has express or implied permission to drive the vehicle. Express permission is verbal or written, while implied permission is generally based on past behavior, the relationship between the people involved, or the lack of objection from the policyholder. For example, if a friend borrows your car with your permission and gets into an accident, your liability insurance should cover the damages to the other party. On the other hand, if an excluded driver, such as someone specifically listed on the policy as not covered, borrows your car and gets into an accident, the accident may not be covered.

It is important to carefully review your insurance policy to understand the specifics of your coverage, including any exceptions or exclusions. If you plan to let others drive your car, it is crucial to ensure you have the appropriate coverage and to consider adding additional drivers to your policy if they are regularly using your vehicle.

Bodily injury liability

Most states in the United States require vehicle owners to maintain a minimum level of bodily injury liability coverage. The minimum coverage limits vary by state, with some states requiring higher minimums than others. For example, Arizona requires a minimum of $25,000 in bodily injury liability coverage per person, while California requires a minimum of $15,000. It is important to know the requirements of your specific state to ensure you are complying with the law.

While the minimum coverage limits provide some protection, experts generally recommend purchasing higher coverage limits to realistically address the risks associated with today's litigious environment. The recommended amount of bodily injury coverage is typically higher than the state-mandated minimums, with $100,000 per person and $300,000 per accident commonly suggested as adequate protection. This higher coverage can help protect your assets in the event of a lawsuit resulting from an accident.

In addition to the state-mandated minimums, there may be other factors to consider when determining how much bodily injury liability coverage you need. For example, if you have a high net worth, you may want to purchase enough coverage to protect your assets. In this case, you may need to purchase additional coverage or an umbrella policy to ensure you have sufficient protection.

Overall, bodily injury liability coverage is an essential component of car insurance, providing financial protection in the event of an accident resulting in injuries to others. By understanding the requirements of your state and the specific needs of your situation, you can ensure you have adequate coverage to protect yourself and your assets.

Property damage liability

Nearly every state requires drivers to carry some level of property damage liability insurance. The minimum amount of property damage liability insurance required varies by state. For example, California requires a minimum of $5,000, Florida requires $10,000, and Texas requires $25,000.

Additionally, property damage liability insurance only covers damage caused while driving. It does not cover damage or injuries caused when not driving. For example, if you accidentally damage someone's property while backing out of your driveway, your property damage liability insurance would not cover the cost of repairs. In such cases, personal liability insurance, which is typically included in property insurance policies, would provide coverage.

It is worth noting that insurance policies can vary, and it is important to carefully review your policy documents or consult with your insurance agent to understand the specific coverages and exclusions of your policy.

Collision coverage

If you choose not to carry collision coverage, you will have to pay for any repairs or replacements out of pocket if you are found at fault in an accident or involved in a single-vehicle accident. If the other driver is found at fault, their liability coverage will typically cover the damage.

When determining whether to purchase collision coverage, consider the value of your vehicle, your ability to pay for repairs or a replacement out of pocket, and whether your vehicle will be in storage for an extended period.

In summary, collision coverage is an optional but valuable form of insurance that can provide financial protection in the event of a collision. It is worth considering, especially if you are leasing or financing your vehicle or if you cannot afford to pay for repairs or a replacement out of pocket.

Comprehensive coverage

• Vandalism
• Fire and explosions
• Glass and windshield damage
• Falling objects, such as trees or limbs
• Rocks or objects kicked up by cars
• Natural disasters like storms, hail, floods, lightning, and earthquakes
• Accidents with animals

The cost of comprehensive coverage varies depending on factors such as the make and model of your vehicle, your location, and the value of your car. It is generally more expensive than minimum liability coverage, with the average annual premium for full coverage in the US being $1,708, according to a 2024 analysis.

When deciding whether to opt for comprehensive coverage, consider factors such as the age and value of your car, your financial situation, and your risk tolerance. Comprehensive coverage may be worth considering if you lease or finance your vehicle, have a newer or high-value car, or cannot afford to pay for repairs or replacement out of pocket. However, if your car is older and has a low value, comprehensive coverage may not be cost-effective.

Frequently asked questions