Auto Insurance Liability: What You Need To Know

Liability insurance is a mandatory part of your car insurance policy in most places. It covers the cost of damages and legal expenses if you are found to be at fault in a car accident. This includes damage to another person's property, such as their car or house, and bodily injury, such as medical expenses and loss of wages. Liability insurance does not cover damage to your own property or injuries you sustain. The minimum amount of liability coverage required varies by region, but it is generally recommended to purchase more than the minimum amount to protect yourself financially.

Bodily Injury Liability Coverage

This type of liability coverage is essential for protecting your assets in the event of a lawsuit. It covers the medical costs of other drivers, their passengers, and even passengers in your car who are not from your household. Additionally, it can provide financial support for funeral costs in the unfortunate event of a fatality.

It is worth noting that Bodily Injury Liability Coverage does not extend to your own medical expenses or repairs to your vehicle. To ensure coverage for your own injuries and property damage, you would need to include Collision Coverage or Comprehensive Coverage in your auto insurance policy.

When determining the amount of Bodily Injury Liability Coverage you need, it is recommended to consider your net worth and choose a limit that adequately protects your assets. While the minimum coverage mandated by your state or province is a starting point, it may not be sufficient, and experts often suggest higher coverage limits, such as $1,000,000 or $2,000,000.

Property Damage Liability Coverage

The amount of Property Damage Liability Coverage you need can vary. While each state or province sets minimum requirements, it may be advisable to purchase additional coverage. This is particularly true if you own a home or other valuable assets, frequently drive in high-traffic areas, or live in an area with many expensive vehicles. It's essential to assess your individual situation and choose a coverage limit that provides adequate protection.

In the event that the cost of damages exceeds your coverage limit, you may be held responsible for the remaining amount. Therefore, it is recommended to carefully consider your coverage needs and select a limit that offers sufficient protection. Additionally, some insurance companies offer umbrella policies that can provide additional coverage beyond your standard auto insurance.

Accident Benefits Coverage

In the unfortunate event of death due to a car accident, Accident Benefits Coverage provides a lump-sum payout to the deceased person's spouse and dependents. It also covers funeral expenses. The typical payout for this benefit is $25,000 to the spouse, $10,000 to each dependent, and up to $6,000 for funeral expenses. However, you have the option to increase these limits.

• Caregiver benefits: If you are unable to care for your dependents due to your injuries, this benefit can help cover the costs of hiring someone to assist you.
• Non-earner benefits: If you are a student or unable to work but do not qualify for income replacement, you may receive a weekly benefit.
• Attendant care benefits: If you require assistance with personal care tasks (such as bathing, dressing, etc.), this benefit will cover the costs of an aide or long-term care facility.
• Other expenses: This can include lost educational expenses, costs for family members to visit during rehabilitation, housekeeping and home maintenance expenses, and replacement of damaged personal belongings.

It is important to note that there are limits and controls on accessing Accident Benefits Coverage, and the specific benefits and limits may vary depending on the province you live in. Therefore, it is recommended to review your auto insurance policy carefully and consider increasing your coverage limits if needed.

Uninsured Motorist Coverage

Liability insurance is a mandatory coverage that must be included in your car insurance policy to legally drive a vehicle in Canada. It protects you financially if you are legally liable for injuring someone or causing damage to another person's property or vehicle while operating a motor vehicle. This type of insurance covers the cost of legal expenses arising from damages caused to other drivers, pedestrians, or property.

The cost of uninsured motorist coverage can vary depending on factors such as the state you live in, the limits of coverage you choose, and the value of your vehicle. It is important to note that not all states mandate uninsured motorist coverage, but even if it is not required in your state, driving without it can be a serious risk. According to the Insurance Information Institute, nearly 13% of drivers countrywide do not have auto insurance, and the number of uninsured drivers exceeds 20% in some states.

Collision Coverage

Liability insurance is a mandatory coverage that must be included in your car insurance policy to drive legally in Canada. It covers the cost of legal expenses arising from damages caused to other drivers, pedestrians, or property, up to your policy limit. It does not cover any damage to your own property.

If you choose not to carry collision coverage, you will have to pay for any repairs or replacements out of pocket, unless the other driver is at fault, in which case their liability coverage will usually pay for the damage. Collision coverage typically applies to single-vehicle accidents, collisions with other vehicles, and collisions while your vehicle is parked. It does not cover collisions with animals, which are covered under comprehensive coverage.

When deciding whether to choose collision coverage, consider the following factors:

• Your personal financial situation and whether you could afford to pay for repairs or replacements out of pocket.
• The value of your vehicle and whether it is worth more than your deductible.
• Whether your vehicle is in storage or not being driven for an extended period.

Frequently asked questions