Understanding Car Insurance Liability Coverage

As a responsible car owner, it is important that we understand the different types of car insurance coverage available. Among the different types of coverage available, liability coverage is perhaps the most important one. This article explains what liability coverage is, why it is important and how it works.

What is Liability Coverage?

Car insurance liability coverage is designed to protect you financially in case you are responsible for causing an accident that results in property damage or bodily injury to another person. The coverage will pay for the damages up to the limits specified in your policy.

Liability coverage is mandatory in almost every state in the US. The minimum amount of liability coverage required varies from state to state. It is important to note that the minimum coverage required by law may not necessarily be enough to cover all the damages you may cause in an accident.

How Does Liability Coverage Work?

When you purchase liability coverage, you are essentially transferring the risk of an accident to the insurance company. In case you are responsible for causing an accident, the insurance company will pay for the damages up to the limits specified in your policy.

The amount of coverage you should get depends on several factors, including your assets and income. If you own a house or have significant savings, you may want to consider getting higher limits to protect your assets in case of a lawsuit.

It is also important to note that liability coverage does not cover damages to your own vehicle or injuries to yourself or your passengers. For that, you need additional coverage such as collision coverage and personal injury protection (PIP).

Types of Liability Coverage

There are two types of liability coverage – bodily injury and property damage. Let’s take a closer look at each of them.

Bodily Injury Liability

Bodily injury liability coverage pays for the medical expenses, lost wages, pain and suffering, and other damages that you are legally liable for as a result of causing an accident that injures another person.

The coverage will also pay for legal expenses if the injured party decides to sue you. The amount of coverage you should get for bodily injury liability depends on the severity of the injuries that can potentially result from an accident.

Property Damage Liability

Property damage liability coverage pays for the damages to another person’s property, such as their car, fence, or house, that you are legally liable for as a result of causing an accident.

The coverage will also pay for legal expenses if the owner of the damaged property decides to sue you. The amount of coverage you should get for property damage liability depends on the value of the property that can potentially be damaged in an accident.

FAQ

Conclusion

Car insurance liability coverage is an important type of coverage that every responsible car owner should have. The coverage is designed to protect you financially in case you are responsible for causing an accident that results in property damage or bodily injury to another person. It is important to get enough coverage to protect your assets and income in case of a lawsuit.

Make sure you understand the different types of liability coverage available and the minimum requirements in your state. Don’t hesitate to consult with an insurance agent to determine the right amount of coverage that best fits your needs and budget.