Liability Auto Insurance: When Is Basic Coverage Enough?

Basic liability auto insurance is a type of car insurance that covers the cost of injuries to others and damage to other people's property in an accident. It is required by law in most states and covers the policyholder's legal and financial responsibility in the event of an accident. However, it does not cover damage to the policyholder's own car or injuries sustained by the policyholder. When considering basic liability auto insurance, it is important to review the specific requirements and recommendations of your state, as well as your personal financial situation, to determine the appropriate level of coverage.

When you can't afford more than the bare minimum

If you can't afford more than the bare minimum of auto insurance, you may want to consider purchasing only liability car insurance. This type of insurance is required by most states and covers the cost of injuries to others and damage to others' property that you're responsible for in an accident. However, it does not cover damage to your own car or injuries to yourself.

The cost of liability insurance varies depending on factors such as your state, age, driving history, and credit score (where permitted by law). On average, the cost of liability auto insurance is $703 per year nationally. If you have a spotty driving record, be sure to get quotes from specialty insurers, as they focus on providing auto insurance to high-risk drivers.

When deciding on the amount of liability coverage to purchase, consider the following:

• The minimum amount of liability coverage required by your state.
• The value of your car—if your car is not worth much, you may not mind paying out of pocket for repairs or replacement.
• Your health insurance coverage—if you have good health insurance, you may not need additional coverage for medical bills.
• How often you drive and how safely you store your car when not in use.

Keep in mind that liability insurance does not cover all expenses that may arise from an accident. If you want more comprehensive coverage, consider purchasing additional types of insurance such as collision and comprehensive insurance, personal injury protection, or uninsured/underinsured motorist coverage. However, these additional coverages will increase your overall insurance cost.

When you own a car that isn't worth much

If you own a car that isn't worth much, you may be considering basic liability auto insurance. This type of insurance is the most basic form of auto coverage and is required to get behind the wheel in nearly every state. It covers the other driver's expenses, whether that's medical care or repairs to their car, in the event of an accident where you are at fault. However, it doesn't cover repairs to your own car, which would require comprehensive or collision coverage.

Liability-only car insurance is a good option if you own a car that isn't worth much and you don't mind paying out of pocket to repair or replace it. It's also a good option if you have good health insurance and don't typically have passengers riding with you, as either of these could increase your financial liability after an accident.

Liability-only insurance is broken down into two parts: bodily injury liability and property damage liability. Bodily injury liability covers other people's medical expenses or lost income stemming from an accident you caused, and it can also help pay your legal fees if there is litigation. Property damage liability covers damage done to another person's car, as well as personal property, like a mailbox or a porch.

When deciding how much car insurance you need, consider your overall financial situation, your comfort level for financial risk, and whether your vehicle is financed or leased. If you own your vehicle outright and feel that you have enough money to pay for damage out of pocket, then liability-only insurance may be a good option for you. However, if paying for vehicle damage out of pocket would cause financial distress, then full coverage may be a better choice.

When you rarely drive

If you rarely drive, you may be able to save money on your insurance policy. How often you use your car is an important rating factor, as those who use their cars less are exposed to loss less often.

There are several ways that occasional usage can influence your rates:

• Vehicle usage rating: If you only drive around town for personal use, you can classify yourself as a pleasure user and save money compared to commuters.
• Annual mileage rating: You will be asked to estimate how much you'll drive your car. Vehicles that fall into a low-mileage bracket will receive a low-mileage discount.
• Daytime driver: Mature drivers over 55 may be able to get a discount if they only drive during daylight hours.
• Multi-car rating: When you own another car in the home, you'll automatically get a multi-car discount off of both cars.
• Extra car rating: If you have more cars in your home than licensed drivers, you may receive an extra car rating.

If you rarely drive, you may also be eligible for parked car insurance. This is comprehensive-only car insurance that covers vehicles that won't be driven at all for a long period of time. For example, if you have a convertible that you don't drive in the winter, or a classic car, you might opt for parked car coverage.

Even if you rarely drive, you will still need to carry the minimum coverage limits of liability insurance for bodily injury coverage and property damage coverage to comply with state requirements. While these limits vary by state, they can be as low as $15,000 per person and $30,000 per accident. However, this type of limit might not be enough to pay for major injuries or significant damage in a multi-car accident. Therefore, it's important to consider purchasing higher liability limits to protect your savings and other financial assets in the event of an accident.

When you don't drive at all

If you don't drive at all, you may still want to consider getting liability-only car insurance to avoid a lapse in coverage. However, this will depend on your specific circumstances, such as whether you own a car or not.

If you don't own a car, you may be covered by the insurance policy of a friend or family member whose car you occasionally drive. In this case, you could be covered by their liability insurance if you cause an accident. However, if you frequently rent cars or use a car-sharing service, you may want to consider non-owner car insurance. This type of insurance can provide you with liability coverage when driving a car that you don't own.

On the other hand, if you own a car but don't drive it at all, you may still be required to have some form of auto insurance depending on your state's requirements. Most states require drivers to carry basic liability insurance, which covers bodily injury and property damage that you may cause to others in an accident. Even if you don't drive your car, there is still a risk of it being involved in an accident, such as if it is stolen or damaged while parked. In this case, having liability insurance can protect you from financial liability if someone else drives your car without your permission and gets into an accident.

Ultimately, the decision to get liability-only car insurance when you don't drive at all will depend on your specific circumstances and the requirements of your state. It's important to review your state's insurance requirements and consider your own needs to make an informed decision.

When you have good health insurance

Liability insurance is divided into two parts: bodily injury liability and property damage liability. Bodily injury liability covers other people's medical expenses or lost income stemming from an accident you caused, as well as your legal fees if there is litigation. Property damage liability covers damage done to another person's car, as well as personal property, like a mailbox or a porch.

While liability insurance is a mandatory part of car insurance in most states, the minimum coverage you need depends on the state you reside in. In a no-fault state, in addition to liability, property damage and bodily injury coverage, a driver may also be required to carry personal injury protection. Uninsured and underinsured motorist coverage may also be required. In most states, you will need to purchase at least your state's minimum required liability limits to legally drive.

If you have good health insurance, you may want to skip personal injury protection (PIP) or medical payments (MedPay) coverage, as these are designed to cover medical expenses for you and your passengers regardless of who's at fault in the accident. However, your health insurance policy won't reimburse you for lost wages and replacement services.

Ultimately, the amount of auto insurance you need (beyond the minimum required) depends on your overall financial situation, your comfort level for financial risk, and whether your vehicle is financed or leased. If you have good health insurance and rarely have passengers riding with you, you may be comfortable with liability-only insurance, as it will cover the other driver's expenses if you're found responsible for an accident.

Frequently asked questions