Auto Insurance: When Liability Crosses The Line

Liability car insurance is a legal requirement in almost every state, except New Hampshire, and provides financial protection for drivers who harm someone else or their property in a car accident. It covers the cost of damage to vehicles and injuries of others resulting from an accident caused by the insured. However, it's important to note that liability insurance has coverage limits, and if the damages exceed these limits, the insured will be responsible for the additional costs. Therefore, it is recommended to purchase higher liability limits or additional insurance policies to ensure comprehensive protection in the event of an accident.

What does liability insurance cover?

Liability insurance is a crucial aspect of vehicle insurance, providing financial protection in the event of an accident where you are at fault. It covers the costs associated with causing injuries to others and damaging their property. This type of insurance is mandated by law in most states, requiring drivers to carry a minimum amount of liability coverage to legally operate their vehicles.

Liability insurance for vehicles is typically divided into two main components: property damage liability and bodily injury liability. Property damage liability covers the costs of repairing or replacing another person's property, including their vehicle, as well as any other property damaged in the accident, such as fences, buildings, or personal belongings inside the vehicle. It also includes legal fees if you are sued for property damage.

Bodily injury liability, on the other hand, covers the medical expenses of those injured in the accident, including hospital and medical bills, rehabilitation services, and in-home healthcare services. Additionally, it may cover lost wages and legal fees if the injured party decides to take legal action. It is important to note that liability insurance does not cover damages to your own property or injuries you sustain in an accident.

When selecting liability coverage, you will choose a coverage limit, which is the maximum amount your insurance provider will pay for injuries or property damage caused by you. It is recommended to select a liability limit that matches or exceeds your total net worth to ensure your assets are adequately protected.

While liability insurance is a mandatory baseline for auto coverage, it is important to consider additional coverages, such as collision and comprehensive insurance, to protect yourself and your vehicle in the event of an accident.

What doesn't liability insurance cover?

Liability insurance is a standard feature of most vehicle and property insurance policies, including auto and homeowners insurance. It protects you financially if you are responsible for someone else's injuries or property damage. However, it is important to understand that liability insurance does have its limitations and there are certain scenarios where it may not provide coverage.

Liability insurance does not cover your own injuries or property damage in the event of an accident. In other words, it won't pay for your medical bills or repairs to your vehicle if you are at fault. This type of coverage is intended to protect others from any harm or damage you may cause and not yourself. For instance, if you are in an at-fault accident and your car is totaled, liability insurance will not reimburse you for the value of your vehicle.

Additionally, liability insurance does not cover damages to your car from events other than collisions. For instance, if your car is vandalised or stolen, you will need comprehensive coverage to reimburse you for these types of incidents.

To cover your own injuries and vehicle repairs, you will need to purchase additional types of insurance. For example, personal injury protection or health insurance can cover your medical expenses, while collision insurance will cover repairs to your vehicle.

It's also worth noting that liability insurance has coverage limits, and if the damages exceed those limits, you will be responsible for paying the remaining amount out of pocket. Therefore, it is crucial to choose appropriate coverage limits that match or exceed your net worth to ensure adequate protection.

What are the state minimum car insurance requirements?

The minimum car insurance requirements vary from state to state in the US. Nearly all states require a minimum amount of liability insurance, which helps pay for any injuries or damages you cause in a car accident, including those of the other driver and their passengers.

Some states require uninsured/underinsured motorist (UM/UIM) coverage, which helps cover the cost of injuries to you and your passengers, as well as damage to your car and other property, if you're hit by a driver with little or no insurance. About half of all states mandate UM/UIM coverage, and some may only require you to purchase coverage for bodily injury.

Personal injury protection (PIP) is mandatory in roughly 20% of states. PIP covers medical expenses for insured drivers and their passengers, regardless of fault. It can also cover lost wages or other benefits not covered by health insurance. You'll typically only need this coverage in no-fault states, but a few at-fault states require it as well.

Some states mandate medical payments coverage, which goes toward medical expenses due to injuries from a car accident. It covers you, your family, or your passengers. It doesn't cover lost wages or any additional benefits. Maine is the only state that requires medical payments coverage.

• Alabama: $25,000 bodily injury per person, $50,000 bodily injury per accident, and $25,000 property damage per accident.
• Alaska: $50,000 bodily injury per person, $100,000 bodily injury per accident, and $25,000 property damage per accident.
• California: $15,000 bodily injury per person, $30,000 bodily injury per accident, and $5,000 property damage per accident.
• Florida: $10,000 property damage per accident and $10,000 personal injury protection.
• New York: $25,000 bodily injury per person, $50,000 bodily injury per accident, and $10,000 property damage per accident.
• Texas: $30,000 bodily injury per person, $60,000 bodily injury per accident, and $25,000 property damage per accident.
• Virginia: Drivers can opt out of the state's insurance requirements by paying a $500 uninsured motorist fee each year.

What are the penalties for driving without liability insurance?

Driving without liability insurance is illegal in virtually every U.S. state, and the penalties for doing so can be severe. The consequences of driving without insurance vary depending on the state and the situation, but generally include fines, license suspension, and even jail time.

Fines

If you are caught driving without insurance, you may face fines ranging from $175 to $5,000, depending on the state and the number of offenses. In some states, such as Texas, the fines for a second or subsequent offense can be significantly higher than the fines for a first offense.

License Suspension

In many states, driving without insurance will result in the suspension of your driver's license. The length of the suspension can vary, but it is typically at least 30 days and can be up to one year or more for repeat offenses. In some states, you may also be required to pay a reinstatement fee to get your license back.

Jail Time

In some states, driving without insurance is considered a misdemeanor, and you may face jail time if convicted. The amount of jail time can vary depending on the state and the number of offenses, but it is generally up to one year for a first offense and can be longer for repeat offenses.

Other Penalties

In addition to the fines, license suspension, and jail time, there may be other penalties for driving without insurance. These can include having your car impounded, being required to file an SR-22 form, and increased insurance premiums when you do get insurance. If you are in an accident while driving without insurance, you may also be held financially responsible for any damages or injuries you cause.

How much liability insurance do you need?

The amount of liability insurance you need depends on your state's minimum liability requirements, your budget, and your personal needs.

Liability insurance covers the expenses of others if you cause an accident. It includes bodily injury liability coverage, which pays for other people's medical costs, and property damage liability coverage, which pays for damage to other people's property.

Each state has different minimum liability requirements. For example, California requires liability insurance with a minimum of $15,000 for bodily injury per person, $30,000 for bodily injury per accident, and $5,000 for property damage. However, these amounts may not be sufficient if you cause a serious accident, and you may be sued for any amount that exceeds your coverage limits.

To determine how much liability insurance you need, consider the following:

• The value of your car: If you have a new or expensive car, you may want more liability coverage to protect yourself financially.
• Your budget: Liability insurance costs vary depending on the state, age, driving history, and other factors. Choose a coverage amount that fits within your budget.
• Your personal situation: If you are a young driver, have a family, or are a first-time driver, you may want more liability coverage for added protection.
• Your net worth: Consider purchasing enough liability insurance to cover your net worth, as this can protect you from potential lawsuits.

While state minimum liability coverage may be required, it is often not enough to cover all expenses in the event of a serious accident. It is recommended to purchase higher liability limits, such as $100,000 per person for bodily injury, $300,000 per accident for bodily injury, and $100,000 for property damage.

Frequently asked questions