Jeffrey Wade
Auto liability insurance is a type of insurance coverage that helps protect you financially if you are found to be at fault in a car accident. It covers the costs of property damage and bodily injuries to the other party involved in the accident. This includes repairs to the other driver's vehicle, rental vehicle costs while their car is being repaired, damage to buildings or other structures, and legal fees if you are sued. Auto liability insurance is required by most states in the US for drivers to legally operate their vehicles, with minimum coverage limits varying by state. It is important to note that auto liability insurance does not cover damages to your own vehicle or personal injuries; separate coverage is needed for those instances.
| Characteristics | Values |
|---|---|
| Purpose | Protects you financially if you're responsible for someone else's injuries or property damage |
| Required? | Yes, in most states to legally drive your vehicle |
| Types | Bodily Injury Liability Coverage, Property Damage Liability Coverage |
| Bodily Injury Coverage | Pays for medical costs, out-of-pocket expenses, and legal defence costs for the injured party |
| Property Damage Coverage | Pays for repairing or replacing another person's property, including vehicles, buildings, fences, etc. |
| Exclusions | Does not cover costs to repair your vehicle or your own medical expenses |
What You'll Learn
Bodily injury liability coverage
Auto liability insurance is a type of insurance that covers damage to property and/or injuries to another person caused by a road accident in which you are at fault. This type of insurance is required by most states in the U.S. to legally drive your vehicle. Auto liability coverage typically refers to two types of coverages: property damage and bodily injury.
The liability limits on your insurance policy will typically show three numbers, such as "100/300/100". These numbers represent your per-person bodily injury liability coverage, per-accident bodily injury liability coverage, and per-accident property damage liability coverage.
The first number, 100, is your bodily injury limit per person. Your policy won’t pay more than this for any individual person’s injuries. The second number, 300, is your bodily injury limit per accident, or the combined amount for all injuries in a single accident.
Most states require a minimum amount for Bodily Injury Liability Coverage. You can also choose higher limits for more protection. You can purchase umbrella insurance for an additional cost if you want even more coverage.
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Property damage liability coverage
Auto liability insurance is a type of insurance that ensures drivers can pay for losses when they are at fault for an accident. It typically refers to two types of coverages: property damage and bodily injury.
Most states require car owners to carry a minimum level of car insurance, including property damage liability coverage, to legally drive their vehicles. The required minimum amount of property damage liability coverage varies by state. However, it is a good idea to purchase more than the state's requirements to have more financial protection.
Property damage liability insurance typically has a "per accident" limit and no deductible. This means that it will pay out up to the amount stated in your policy after an accident for which you are at fault. If the damage exceeds your policy limit, you will be responsible for the remaining costs.
When choosing a property damage liability limit, it is important to consider your total net worth and select a limit that matches or exceeds it. This will ensure that your assets are well-protected if you are legally responsible for someone else's property damage.
In summary, property damage liability coverage is an essential component of auto liability insurance, providing financial protection and peace of mind for drivers who may be involved in accidents causing property damage to others.
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What auto liability insurance covers
Auto liability insurance covers the costs of the other driver's property and bodily injuries if you are found to be at fault in an accident. This type of insurance is required by most states to legally drive your vehicle.
Auto liability insurance typically refers to two types of coverage: property damage and bodily injury. Property damage coverage pays for damage to another person's property, including repairs to the other driver's vehicle, a rental vehicle while the other person's car is being repaired, and damage to buildings, fences, or other structures. It also covers damage to personal property, such as electronics or belongings inside a vehicle, and legal fees if you are sued for property damage.
Bodily injury coverage, on the other hand, provides payment for others injured in an accident, including legal fees if you are sued for injuries you caused. This type of coverage may also include lost wages for the injured party. The specific requirements for bodily injury claims may vary from state to state.
It is important to note that liability insurance does not cover your own injuries or damage to your own property. Instead, it is designed to protect you financially if you are responsible for someone else's injuries or property damage. The coverage limits you choose will determine the maximum amount your policy will pay for injuries or property damage caused to others.
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What auto liability insurance doesn't cover
Auto liability insurance, which is required in most states, covers the costs of the other driver's property and bodily injuries if you are found at fault in an accident. However, there are certain things that auto liability insurance does not cover.
Firstly, auto liability insurance does not cover damages to your own property or your own injuries. In other words, it does not provide protection for your own vehicle or personal injury expenses resulting from an accident. This type of coverage is typically provided by other insurance options, such as comprehensive and/or collision coverage, personal injury protection, or uninsured/underinsured motorist coverages.
Additionally, auto liability insurance may not cover all types of property damage or bodily injuries in all circumstances. For example, there may be limitations on the specific types of property damage covered, or there could be exclusions for certain types of injuries. It's important to carefully review your policy to understand the extent of your coverage.
Furthermore, auto liability insurance typically does not cover legal fees or settlements if you are sued by the other party. This is usually covered under separate legal expenses insurance or as part of a comprehensive insurance package.
Lastly, auto liability insurance does not cover any costs that exceed the coverage limits you have selected. These limits, typically represented by three numbers (e.g. 25/50/25), indicate the maximum amount your insurance will pay for bodily injury per person, bodily injury per accident, and property damage per accident. Choosing adequate coverage limits that match or exceed your total net worth is essential to ensure your assets are well-protected.
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Is auto liability insurance required?
Auto liability insurance is required in most states to legally drive your vehicle. This type of insurance covers two main areas: property damage and bodily injury.
Property damage liability insurance covers repairs to the other driver's vehicle, a rental vehicle while the other person's car is being repaired, damage to buildings, fences, or other structures, and damage to personal property, such as electronics or belongings inside a vehicle. It also covers legal fees if you're sued for property damage and other related costs.
Bodily injury liability insurance covers injuries sustained by another person in an accident, including medical expenses, rehabilitation, and legal costs if you are sued.
The required limits of auto liability insurance vary by state, and it's important to check the specific requirements for your state. While most states mandate auto liability insurance, New Hampshire is one exception. Even in states that don't require it, lenders and landlords may mandate auto liability insurance.
The cost of liability insurance depends on various factors, including the amount of coverage you select. Higher coverage limits typically result in higher costs. It's recommended to choose a liability limit that matches or exceeds your total net worth to adequately protect your assets.
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Frequently asked questions
Auto liability insurance covers the costs of any property damage or bodily injuries to a third party if you are found at fault in a car accident.
Auto liability insurance has two parts: property damage and bodily injury. Property damage liability covers the cost of repairing or replacing another person's property, such as their vehicle, mailbox, or fence. Bodily injury liability covers the injured party's medical costs, lost wages, and legal fees if they decide to sue.
Yes, almost every state requires some form of liability insurance for you to legally drive a vehicle. The required liability limits vary from state to state.
While it can be tempting to choose the state minimum to keep costs low, it's important to consider what would happen if you were involved in a serious accident. You should choose a liability limit that you can afford and that matches or exceeds your total net worth to adequately protect your assets.
