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Liability only car insurance is a type of insurance that pays and renders service on behalf of an insured for loss arising out of his responsibility to others imposed by law or assumed by contract. Liability coverage is mandatory in all states except New Hampshire and Wisconsin. Each state has its own minimum liability coverage amounts based on everything from accident statistics and population to economic factors and national averages. Liability only car insurance is rarely enough to cover you in case of an accident, but it will satisfy your state requirements.
In most states, liability only car insurance covers three areas: bodily injury per injured person, bodily injury per accident, and property damage. For example, in the state of Illinois, all drivers must carry minimum liability coverage amounts of $20,000 for injury or death of one person in an accident, $40,000 injury or death of more than one person in an accident, and $15,000 damage to someone elses property or 20/40/15. In Alaska, where minimum liability coverages are the highest in the nation, motorists must carry $50,000 for death or injury of one person, $100,000 for death or injury of two or more persons, and $25,000 for property damage.
Liability limit is the maximum amount the liability insurance company pays for any one occurrence (an accident or an exposure to substantially the same conditions over a period of time which causes an injury.) This limit is usually the same regardless of the number of named insured, claims made or persons injured.
According to AutoInsurancetips.com, in some states minimum liability coverages may include mandatory medical payment coverage (applies no matter who is at fault) up to $1,000 or more or $5,000 or more for personal injury protection or PIP. Personal injury protection covers treatment of injuries to a driver and any passengers in the car. PIP is also known as no-fault benefits in states that have enacted mandatory or optional no-fault coverages. PIP usually includes benefits for loss of work income, accidental death and funeral expenses, essential services, and medical expenses.
Liability car insurance is mandatory in most states, but as stated earlier, it's rarely enough to cover property damages and major injuries in the unfortunate event of an accident. Most state insurance agencies recommend carrying higher coverages that the bare minimum liability requirements. Auto insurance companies agree. Insurance agents will offer a number of additional coverages and/or higher amounts based on a type of car, usage, and number of drivers, driving history, and geographic location.
Liability only car insurance may satisfy the requirements of the law if you carry a car note or own your vehicle, but the rules are different for leases. If you lease your vehicle, the company that carries the title to the car dictates the minimum amount of coverage you must carry. This is usually much higher than liability only car insurance. In fact, most titleholders will require full coverage, not liability coverage, before your lease will be approved. Full coverage insurance provides for the payment of all insured losses in full. Full coverage or physical damage coverage includes both collision and comprehensive coverage.
Collision refers to car insurance that covers loss (direct or accidental) to the policyholders own vehicle caused by a collision with another vehicle or object. Collision does not cover bodily injury or property damage liability resulting from the collision. Comprehensive or blanket coverage refers to physical damage coverage for losses resulting from theft, fire, falling objects, vandalism, and other various perils.
Michelle Burton is a published author and contributing editor for Auto Insurance Tips, Trouvé Media, Internet Brands, and Publications International, Ltd.