Liability Auto Insurance: What's Covered And What's Not

Liability car insurance is the most basic form of auto insurance and is required by law in most states. It provides financial protection for a driver who harms someone else or their property while operating a vehicle. This type of insurance typically includes two types of coverage: bodily injury liability and property damage liability. Bodily injury liability covers medical expenses for those involved in the accident, including the driver, passengers, and third parties. Property damage liability, on the other hand, covers the costs of repairing or replacing the vehicles and other property of other drivers involved in the accident. While liability insurance is essential, it is important to note that it does not cover damages to the policyholder's vehicle or personal injuries, which would require additional coverage.

Bodily injury liability

Furthermore, bodily injury liability can offer legal protection if the injured party decides to take legal action. It can help cover the policyholder's legal fees and court-related expenses.

Who is Covered Under Bodily Injury Liability?

It is important to note that bodily injury liability does not cover the medical expenses of the policyholder or their household members. To ensure coverage for the policyholder and their passengers, separate medical payments or personal injury protection (PIP) coverage is required.

Additionally, bodily injury liability does not cover any damage to vehicles or property. For that, property damage liability coverage is needed.

Furthermore, in most states, bodily injury liability is legally required. Failing to obtain the necessary coverage could result in fines, license suspension, or even jail time for repeat offenses.

The amount of bodily injury liability coverage required varies by state. Each state sets minimum coverage limits that drivers must carry. However, it is generally recommended to purchase coverage beyond the state-mandated minimums. This is because medical bills can be expensive, and insufficient coverage could leave the policyholder vulnerable to lawsuits and financial strain.

Experts suggest having bodily injury liability limits of at least $100,000 per person and $300,000 per accident. It is also advisable to consider purchasing an umbrella insurance policy to provide additional protection if your net worth exceeds the liability limits offered by standard auto insurance policies.

Property damage liability

The limits of property damage liability coverage vary from state to state, with each state setting its own minimum requirements. For example, in Illinois, the minimum PD liability limit is $20,000 per accident. It is important to note that if the cost of damages exceeds your coverage limit, you will be responsible for paying the remaining amount out of pocket. Therefore, it is advisable to consider purchasing coverage beyond the state-mandated minimum to ensure you are adequately protected in the event of an accident.

When determining the amount of property damage liability coverage you need, consider factors such as whether you own expensive property, frequently travel in high-traffic areas, or live in an area with many expensive vehicles. Additionally, keep in mind that you can choose a higher limit for this coverage to ensure you are adequately protected.

Personal injury protection

In states with no-fault insurance laws, all drivers must have personal injury protection as part of their auto policies. In other states, PIP insurance is optional, but it is generally recommended to have it to avoid footing serious medical bills in the event of an accident.

The specific benefits of PIP insurance vary by state and insurance provider. In Texas, for example, PIP insurance covers reasonable medical costs, rehabilitation therapy, lost income, and replacement of necessary services provided by the injured party. The minimum coverage offered is $2,500, but drivers can increase their coverage to $5,000 or $10,000 for additional financial protection.

It is important to note that PIP does not cover everything. For example, it does not cover the injuries of other drivers in a collision or any injuries sustained while committing a crime or receiving payment for driving. To ensure full coverage, individuals may need to consider additional policies such as bodily injury liability insurance and property damage liability insurance.

Uninsured and underinsured motorist coverage

Uninsured motorist coverage comes into effect when a driver or their passengers are injured in an accident caused by a driver with no liability insurance. This coverage ensures that medical bills for the driver and their passengers are paid, preventing out-of-pocket expenses. Additionally, it may cover lost wages and legal fees if the injured party files a lawsuit. In the case of property damage, uninsured motorist property damage (UMPD) coverage can pay for repairs to the insured's vehicle and other damaged property.

Underinsured motorist coverage, often offered alongside uninsured motorist coverage, provides financial protection when an accident involves a driver whose insurance coverage is insufficient to pay for the damages or injuries they have caused. Underinsured motorist bodily injury (UIMBI) coverage takes care of medical bills for both the insured driver and their passengers, while underinsured motorist property damage (UIMPD) coverage addresses repairs to the insured's vehicle.

It is important to note that uninsured and underinsured motorist coverage also applies in hit-and-run incidents, where the at-fault driver cannot be identified. This coverage can provide valuable protection in such situations, although it may not cover property damage in all states.

While not all states mandate uninsured and underinsured motorist coverage, it is highly recommended for all drivers to have this protection. Without it, drivers may be left vulnerable, bearing the financial burden of medical bills and vehicle repairs after an accident involving an uninsured or underinsured driver.

Legal fees

Liability car insurance provides financial protection for drivers who harm someone else or damage someone else's property in a car accident. While liability insurance covers the financial costs of property damage and bodily injury, it may also cover legal fees incurred by the policyholder.

If you are sued by another driver, your insurance company will likely cover your legal fees. Most auto insurance policies have a "duty to defend" the policyholder built into the policy. In this case, the insurance company will provide a lawyer to represent you and cover their fees. However, this is dependent on the policyholder not acting intentionally and providing the insurance company with timely notice of the accident.

If you are the one filing a lawsuit against another driver, your insurance company will not cover your legal fees. In this case, you will need to hire your own lawyer and pay their fees yourself. Additionally, if the other driver's damages exceed your policy limits, you may need to pay for a lawyer yourself.

Frequently asked questions