Paul Sanchez
Liability car insurance is a type of insurance coverage that pays for property damage and/or injuries to another person caused by an accident in which you're at fault. This type of auto coverage is required by most states to legally drive your vehicle. It covers the cost of personal injuries and property damage after an accident you’re found to be at fault for. Liability insurance won't pay for your own medical bills or car repairs. It is always a good idea to carry more liability coverage than what you’re legally required to so you’re not left paying the difference.
| Characteristics | Values |
|---|---|
| What does liability insurance cover? | Bodily injury liability coverage and property damage liability coverage |
| Bodily injury liability coverage | Pays other people’s medical costs when they’re injured in a traffic-related accident you cause |
| Property damage liability coverage | Pays for damage to other people's property after a traffic-related accident you cause |
| 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 | Bodily injury liability limit per person, bodily injury liability limit per accident, and property damage liability limit per accident |
| How much liability coverage you need | Nearly every state requires at least some liability coverage |
| How much does liability coverage cost? | The cost of liability insurance coverage depends on factors like how much coverage you select |
What You'll Learn
Bodily injury liability coverage
When purchasing auto insurance, you will typically see bodily injury liability limits represented as a set of three numbers, such as "$25,000/$50,000/$25,000" or "25/50/25." The first number refers to the maximum bodily injury coverage per person, while the second number indicates the total coverage for all injuries in a single accident. The third number represents property damage liability coverage, which is separate from bodily injury coverage. It is important to choose appropriate coverage limits to ensure you have sufficient protection in the event of a significant accident.
The amount of bodily injury liability coverage you need depends on several factors. Firstly, you should ensure that you meet the minimum coverage requirements mandated by your state. However, it is generally recommended to have coverage limits that match or exceed your net worth to provide adequate protection. If your auto insurance provider's coverage limits are not high enough, you may consider purchasing an umbrella policy, which can provide additional liability coverage.
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Property damage liability coverage
- Damage to another vehicle: Covers the cost of repairs or replacement of the other driver's vehicle.
- Rental vehicle coverage: Provides a rental vehicle for the other person while their car is being repaired.
- Damage to buildings and structures: Covers damage to fences, buildings, or other structures, including government property.
- Damage to personal property: Covers damage to personal belongings, such as electronics or items inside the vehicle.
- Legal fees: If you're sued for property damage, this coverage can help with legal fees.
Property damage liability insurance typically has a "per accident" limit with no deductible. This means it will pay out for each accident you cause, but only up to the limit stated in your policy. If the damage exceeds your policy limit, you will be responsible for the remaining cost. It's important to review your policy's limits and choose adequate coverage to protect yourself financially.
Most states require a minimum amount of property damage liability coverage, but buying more than the state's requirements offers greater financial protection. Consider factors such as the value of your home and other assets, whether you drive in high-traffic areas, and the presence of expensive vehicles in your area.
Additionally, keep in mind that the average cost of damage from a crash involving only property damage is $5,700 per vehicle, but this can be much higher for newer or luxury vehicles.
Understanding Coverage Limits
When reviewing property damage liability coverage, you'll often see it written as three numbers, such as "25/50/10." The first two numbers represent bodily injury coverage per person and per accident, while the third number indicates the policy's property damage liability limit. For example, a policy with limits of "100/300/100" provides:
- $100,000 of bodily injury coverage per person
- $300,000 of bodily injury coverage per accident
- $100,000 of property damage coverage per accident
In conclusion, property damage liability coverage is an essential aspect of auto insurance, protecting you from financial liability if you're at fault in an accident. By understanding what it covers, how it works, and the necessary coverage limits, you can make informed decisions about your auto insurance policy.
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Personal injury protection
PIP insurance can help cover medical expenses for you and your injured passengers. It also covers you even if you are not driving. For example, if you are injured after being hit by a car while walking, your PIP coverage may help pay for your injuries.
In addition to covering medical bills for you and your passengers after a car accident, PIP coverage may also help cover your health insurance deductible. If you are injured in an accident and are unable to work, your PIP coverage can help with lost wages. This benefit also applies if you are self-employed and need to hire temporary workers to perform tasks.
Your PIP coverage can also help pay for funeral, burial, or cremation expenses after a car accident. If you pass away in an auto accident, your PIP insurance can help replace your lost income for your surviving dependents. PIP insurance can also help pay for services that you would normally perform if you weren't injured, such as childcare and house cleaning.
However, PIP does not cover everything. It will not cover the other driver's injuries in a collision, any injuries from an accident while you were committing a crime (such as fleeing the police), or injuries sustained while you were being paid to drive.
The requirements for PIP coverage vary from state to state. In states with no-fault insurance laws, all drivers must purchase PIP coverage as part of their auto policies. In at-fault states, the insurance company of the driver who caused the accident is responsible for paying for injuries, up to the policy limits. In some states, PIP coverage is optional.
The cost of PIP insurance varies depending on factors such as the amount of coverage, your location, and your driving history. It is recommended to compare quotes from multiple insurers to get the best rate.
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Uninsured/underinsured motorist coverage
Uninsured motorist coverage safeguards you in the event that you are hit by a driver who does not have auto insurance. This coverage extends to both your injuries and those of your passengers, as well as any damage to your vehicle. If the at-fault driver has no insurance, this coverage ensures that you are not left bearing the financial burden of medical bills and vehicle repairs.
Underinsured motorist coverage, typically offered alongside uninsured motorist coverage, comes into effect when the driver at fault does not have sufficient insurance coverage to pay for the damages or injuries they caused. This scenario can result in high out-of-pocket expenses if you do not have the appropriate coverage. Underinsured motorist coverage ensures that you receive the necessary financial support to cover these costs.
In some states, uninsured/underinsured motorist coverage is required by law, while others may offer it as an option. It is important to note that nearly 13% of drivers countrywide do not have auto insurance, and this number rises above 20% in certain states. Therefore, having this coverage can provide significant peace of mind and financial protection.
When considering uninsured/underinsured motorist coverage, it is advisable to choose insurance limits that match your liability coverage. This ensures that you have adequate protection in the event of an accident. Additionally, you may want to select a UMPD limit that aligns with the value of your vehicle.
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Medical payments coverage
MedPay can cover expenses such as hospital visits, ambulance fees, surgeries, and dental procedures. It can also help with health insurance deductibles and co-pays, making it especially useful for those without health insurance. Limits for MedPay typically range from $1,000 to $10,000, and it's recommended to carry coverage equal to your health insurance deductible to cover any out-of-pocket medical expenses.
While MedPay is optional in most states, some states offer personal injury protection (PIP) coverage instead. PIP is similar to MedPay but also covers lost wages if you're forced to miss work due to an accident. In no-fault states, where your insurance covers personal injury expenses regardless of fault, you may be required to purchase PIP as part of your auto insurance policy.
In summary, Medical Payments Coverage is an optional but valuable addition to your auto insurance policy, providing financial peace of mind and ensuring that you and your passengers are covered for medical expenses in the event of a car accident.
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Frequently asked questions
Liability insurance covers the cost of property damage and bodily injuries to a third party in an accident that you are at fault for. It also covers legal fees if you are sued for property damage.
Liability insurance does not cover damages to your own property or injuries. You will need additional coverage, such as collision and medical coverage, for that.
The amount of liability coverage you need depends on your net worth. It is recommended to have enough coverage to protect your assets in case of a lawsuit.
Liability insurance is required in most states, although the minimum coverage requirements vary. Virginia and New Hampshire are the only states that do not require it.
The cost of liability insurance depends on various factors, including the amount of coverage you select. Higher coverage limits will generally cost more.
