Understanding Liability Only Auto Insurance

Auto insurance is one of the most essential expenses vehicle owners have to consider. It is a contract between a vehicle owner and an insurance company where the owner pays a premium and the insurer agrees to pay for any damages caused in case of an accident or theft. There are different types of auto insurance policies available, and liability only auto insurance is one of them. In this article, we will understand what liability only auto insurance is, how it works, and other important aspects you need to know.

What is Liability Only Auto Insurance?

Liability only auto insurance is a policy that covers damages caused by a driver to other people’s property or injuries to other drivers or passengers in case of an accident. This policy does not cover damages to the insured’s car or injuries to the insured driver and passengers. Liability only coverage is mandatory in most states, and every driver must carry the minimum liability insurance required by law.

How Does Liability Only Auto Insurance Work?

Liability only auto insurance covers damages up to a specified limit. The policyholder pays for any damages above this limit. For instance, if the limit is $50,000, and the damages caused in an accident amounts to $70,000, the policyholder will pay $20,000 out of pocket. The insurance company will pay the remaining $50,000. The policyholder can choose the limit of liability insurance they want to buy, but it should not be less than the minimum required by law.

What Does Liability Only Auto Insurance Cover?

Liability only auto insurance covers damages to other people’s property and injuries to other drivers or passengers in case of an accident caused by the policyholder. It covers the following:

What is Property Damage Liability?

Property damage liability covers any damages caused by the policyholder to other people’s property, such as cars, fences, buildings, and other structures. Property damage liability insurance can also cover legal fees and court costs in case the policyholder gets sued.

What is Bodily Injury Liability?

Bodily injury liability covers the medical expenses, lost wages, and other damages caused by the policyholder to other drivers or passengers in case of an accident. It also covers legal fees and court costs in case the policyholder gets sued.

What is Guest Passenger Liability?

Guest passenger liability covers injuries to passengers in the policyholder’s car. It only covers passengers who do not have auto insurance or are excluded from the policy.

FAQs about Liability Only Auto Insurance

1. Is liability only auto insurance cheaper than full coverage?

Yes, liability only auto insurance is cheaper than full coverage because it only covers damages caused by the policyholder to other people’s property or injuries to other drivers or passengers. Full coverage includes liability coverage, collision coverage, and comprehensive coverage, which covers damages to the insured car.

2. Do I need liability only auto insurance if I have a car loan?

If you have a car loan, your lender may require you to have full coverage auto insurance instead of liability only auto insurance. This is to protect their investment in case of an accident. Once you pay off your car loan, you can switch to liability only auto insurance if you want to save money.

3. What is the minimum liability insurance required by law?

The minimum liability insurance required by law varies from state to state. You should check your state’s minimum liability insurance requirements and buy the required coverage. Driving without the minimum coverage can result in fines, license suspension, and registration suspension.

4. Can I add more coverage to liability only auto insurance?

Yes, you can add more coverage to liability only auto insurance, such as collision coverage, comprehensive coverage, or personal injury protection. However, adding more coverage will increase your premium.

5. How can I save money on liability only auto insurance?

You can save money on liability only auto insurance by comparing quotes from different insurance companies and choosing the one that offers the best coverage at the lowest price. You can also ask for discounts, such as safe driver discounts, multi-car discounts, or bundling discounts if you have other insurance policies with the same company.

Conclusion

Liability only auto insurance is a policy that covers damages caused by a driver to other people’s property or injuries to other drivers or passengers in case of an accident. It is mandatory in most states, and every driver must carry the minimum liability insurance required by law. Liability only auto insurance is cheaper than full coverage auto insurance, but it only covers damages to other people’s property or injuries to others, not the insured’s car or injuries to the insured driver and passengers. If you want to save money on auto insurance, you can consider liability only auto insurance, but make sure you buy the minimum coverage required by law and add more coverage if needed.