Protect Yourself With a Liability Insurance Policy

April 29, 2011

While you're shopping for a car insurance policy, you may want to consider adding liability coverage at the same time. Here's why:

How does a liability insurance policy protect you? 

In short, it saves you money. If you are at-fault for an auto accident and cause bodily or property damage to another person, your liability insurance coverage will pay for those damages up to your limit. You will be responsible for paying the rest of the medical or repair bills if the costs exceed your limit, but your insurance coverage may help pay for a majority of the bills. In addition, property damage liability will help pay for defense of potential lawsuits and bail bonds.

Where is liability insurance coverage required?

There are two types of auto insurance coverage under liability insurance: property damage liability and bodily injury liability insurance. Property damage liability pays for damages you cause to others’ property, for example another person’s vehicle, fence or house. Bodily injury liability insurance pays for medical bills related to bodily injuries that a third party suffers due to an accident you cause.

If you are a United States resident, you most likely are required to have minimum liability insurance coverage. The only state that does not require minimum car insurance coverage is New Hampshire. The minimum amount required by each state varies, so you should check with your local DMV to determine the amount you need to stay legal.

How does a liability insurance policy work?

A liability insurance policy is represented by three numbers that indicate your limits, such as 25/50/10. The first number is the maximum amount in thousands your insurance company will pay per person that suffers bodily injuries. The second number is the total amount in thousands your insurance company will pay toward bodily injuries suffered by all third party members. The third number is the total amount in thousands your insurance company will pay toward a third party’s property damage.

For example, if three people suffer bodily injuries from an accident you cause, the total bodily injury amount (the second number) will be used to pay for all of their medical bills. However, each person can use no more than the per person maximum bodily injury amount (the first number). So, if two of those people each require $25,000 for medical bills, you would be responsible for paying the third person’s medical bills since you will have reached your liability insurance policy limit.

When you get a car insurance quote, you can determine the limit you want depending on the premium and deductible you can comfortably afford.

Where do I get a car insurance quote?

Now that you understand the basics of liability insurance, contact a few reputable auto insurance companies to compare car insurance quotes. An agent can help you determine the limits you can afford while ensuring adequate protection if you cause a car accident.  Be a smart and responsible driver by protecting yourself with liability insurance coverage.

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