Paul Sanchez
Liability car insurance is a type of coverage that provides financial protection if you are found legally responsible for an accident that results in injury, death, or property damage. It is included in auto insurance policies and is required by most states to legally drive your vehicle. Liability coverage typically includes two types of coverage: property damage and bodily injury. Property damage liability covers the costs of repairing or replacing damaged property, such as vehicles, buildings, or fences, while bodily injury liability covers medical expenses for those injured in the accident. While liability insurance is a necessary component of auto insurance, it is important to note that it does not cover damages to your own vehicle or personal injuries.
| Characteristics | Values |
|---|---|
| What does liability insurance cover? | Bodily injury liability coverage and property damage liability coverage |
| What liability auto insurance doesn't cover | Auto liability insurance won’t pay for your or your family’s medical bills or repairs to your car |
| Liability car insurance limits | Liability car insurance pays only up to the maximum amounts, or “limits,” specified in your policy |
| How much liability coverage you need | Nearly every state requires at least some liability coverage |
| Is liability insurance required by law? | Most states require some form of liability coverage |
What You'll Learn
Bodily injury liability coverage
Liability car insurance is a type of coverage that provides financial protection if you are found legally responsible for an accident that results in injury, death, or property damage. This type of insurance is required by most states to legally drive your vehicle.
The specific coverage provided by bodily injury liability insurance can vary. Generally, it will cover medical expenses, including emergency services, hospital care, and recovery equipment such as wheelchairs. It can also help compensate for pain and suffering and, in the unfortunate event of a fatality, funeral costs. Additionally, if the injured person needs time off work for ongoing care, this coverage can help compensate for lost income.
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Property damage liability coverage
If you are found at fault in an accident, property damage liability coverage will pay for the repairs or replacement of the damaged property, up to the limit of your coverage. It is important to note that if the cost of damages exceeds your coverage limit, you will be responsible for the remaining cost. Therefore, it is crucial to carefully consider your coverage needs and choose a limit that provides sufficient protection.
In addition to property damage liability coverage, bodily injury liability coverage is also a standard component of auto insurance policies. This covers the medical expenses, rehabilitation, and legal costs of individuals injured in an accident caused by the policyholder. Together, these two types of liability coverage provide financial protection and help meet your legal responsibilities in the event of a vehicle-related accident.
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Minimum liability coverage
Liability car insurance is a very popular type of coverage that provides financial protection if you are found legally responsible for an accident that results in injury, death, or property damage. It is required by most states to be able to legally drive your vehicle.
The minimum liability coverage required by law varies from state to state. For example, in California, the minimum liability insurance requirements are:
- $15,000 for injury/death to one person.
- $30,000 for injury/death to more than one person.
- $5,000 for damage to property.
These limits are divided into two types of coverages:
- Bodily Injury (BI) Liability: This covers the medical bills for those injured during the accident, including loss of income and costs associated with pain and suffering. The minimum coverage limits range from $15,000 per person to $100,000 per person.
- Property Damage (PD) Liability: This covers the costs to repair or replace items damaged in the accident, including other vehicles, homes, fencing, and storefronts. The minimum coverage limit is typically $5,000 per accident, but can go up to $50,000.
While purchasing the minimum liability coverage can save you money on your monthly premiums, it may not be enough to offset potential long-term costs if you are found to be at fault in a serious accident. In such cases, you may be responsible for paying any expenses that exceed your policy liability limit out of pocket. Therefore, it is recommended to purchase as much liability coverage as you can afford to adequately protect your savings and assets.
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Liability coverage limits
In the context of auto insurance, liability coverage limits are typically expressed as three numbers, such as 25/50/10 or 25/50/25. The first number represents the maximum amount of bodily injury coverage per person, the second number represents the maximum amount of bodily injury coverage per accident, and the third number represents the maximum amount of property damage coverage per accident. For example, a policy with liability coverage limits of $25,000/$50,000/$10,000 will cover up to $25,000 in bodily injury per person, $50,000 in total bodily injury per accident, and $10,000 in property damage per accident.
It's important to note that the minimum liability coverage limits required by each state vary, and drivers can choose to purchase additional coverage to suit their needs. For instance, Colorado mandates a minimum coverage of $25,000 for bodily injury or death to any one person in an accident, $50,000 for bodily injury or death to all persons in any one accident, and $15,000 for property damage in any one accident.
When selecting liability coverage limits, it's crucial to consider your financial situation and the value of your personal assets. While higher coverage limits typically result in higher insurance rates, they can provide greater financial protection in the event of a significant accident.
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Full coverage insurance
When people refer to "full coverage" auto insurance, they usually mean a combination of liability, comprehensive, and collision insurance. However, it is important to note that there is no standard definition of "full coverage" and no single policy can provide 100% coverage in all situations.
Full coverage auto insurance typically includes liability insurance, which is mandatory in almost all states. Liability insurance covers damages or injuries you cause to another person or their property in an accident, up to a certain limit. It includes bodily injury liability, which covers medical bills and lost income for injured parties, and property damage liability, which covers the cost of repairing or replacing damaged property.
To protect your own vehicle, comprehensive and collision insurance are added to the policy. Comprehensive insurance covers damage to your vehicle from events beyond your control, such as theft, vandalism, floods, hail, or hitting an animal. Collision insurance covers the cost of repairing or replacing your vehicle if it collides with another vehicle or object, regardless of fault.
While liability insurance is usually required by states, comprehensive and collision insurance are often optional. However, lenders or lease companies may require these coverages to protect their investment.
In addition to the core components of full coverage insurance, there are other optional coverages that can provide additional protection. These include roadside assistance, rental car reimbursement, and medical payments coverage, among others.
When determining what full coverage insurance means for you, it is important to consider your specific needs and situation. The amount of coverage you need will depend on factors such as the value of your property and assets. You can use tools like a coverage calculator to help you decide.
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Frequently asked questions
Liability auto insurance provides financial protection if you are legally responsible for an accident that results in injury, death, or property damage. It covers the costs associated with the injuries or property damage of a third party and their property, not the driver or the driver's property.
Liability auto insurance covers two main components: bodily injury liability and property damage liability. Bodily injury liability covers medical costs, pain and suffering, lost wages, and funeral costs for injured parties. Property damage liability covers the costs of repairing or replacing damaged property, including vehicles, buildings, fences, and other structures.
Nearly every state in the US requires drivers to carry some form of liability auto insurance, with minimum coverage limits varying by state. Only Virginia and specific parts of Alaska exempt residents from this requirement.
It is recommended to purchase liability insurance with higher coverage limits than your state's minimum requirements to adequately protect your savings and financial assets in the event of an accident. Consider enough liability insurance to cover your net worth, which includes your cash, investments, and assets minus your debt.
The cost of liability auto insurance varies depending on factors such as the coverage limits selected, driving record, age, location, and vehicle value. The national average cost of minimum liability insurance is $493 per year, according to NerdWallet's August 2024 rate analysis.
