Liability Car Insurance: Understanding the Coverage and Limitation
Auto liability insurance is required in most states. Liability insurance covers you if you cause damage or injury to another driver, their passengers and/or their property or if you injure pedestrians.
Liability car insurance has two components: bodily injury liability and property damage liability. Bodily injury liability will protect you if you are found liable for someone's medical expenses or if you're sued for having caused harm. Property damage liability will pay for repairs to someone else's car or for hitting public/private property if you are held responsible for the damage.
Does your car insurance policy have adequate limits to pay for a collision? People with liability-only car insurance often don't check before an accident happens and find out too late that they don't have enough coverage.
Liability auto insurance is what will protect you if you cause an accident, so make sure to raise your limits if they are low. Otherwise, you'll have to pay for losses. You may even be sued if your auto insurance policy has insufficient coverage.
Does Liability Insurance Cover My Car Too?
No one thinks they will have an accident and many people are unaware that liability car insurance only covers other parties, not themselves or their passengers.
If you are in an accident, your liability coverage will not pay for damages to your car or for your medical expenses related to the accident. If you want yourself and your passengers to be covered you should add collision coverage to your standard auto insurance policy. Consider personal injury protection (PIP) coverage if you do not have health insurance.
A car insurance policy is only as useful as you make it. Consider the pitfalls of having liability-only car insurance if there are medical bills for you and your passengers.
How Do I Set Limits for Liability Car Insurance?
You'll want to set high enough liability limits that will cover you if you cause damage or injuries. Each state has minimum coverage liability limits for bodily injury liability and property damage liability.
Your bodily injury liability limit is set per person, for each individual injured in an accident you cause. There's also a bodily injury liability limit per accident, so if several people are injured in an accident there's a limit per person and per accident.
With property damage liability you set a maximum amount. If you exceed the limit you've set after being found liable in an accident, you'll have to pay the damages out of pocket. If you raise your liability limits your car insurance rates may go up, but you will save money in the long-run if you are at-fault in an accident.
Liability Car Insurance Limits Breakdown
Usually, bodily injury and property damage liability coverages are lumped together. A sample coverage would be 25/50/10, which breaks down to $25,000 bodily injury per person, $50,000 bodily injury per accident limit and $10,000 property damage limit. Anything that goes over these amounts will be your responsibility.
Does Liability Coverage Have a Deductible?
There is no deductible for liability insurance. However, your rate may go up if you're in an at-fault accident.
If you ever cause a car crash, liability insurance pays for other people's injuries and property damage up to your liability limit. How much is your liability limit? It depends on the state where you live and how much additional liability insurance you choose to purchase.
With liability insurance, you'll get coverage for bodily injury liability coverage per person, bodily injury liability coverage per accident and property damage liability coverage. For example, in California, the minimum bodily injury liability coverage is $15,000 per person and $30,000 per accident and the minimum property damage liability is $5,000 per accident.
Each state has its own minimum liability insurance requirements for its drivers. Some are much higher than others. And some, such as California, have limits that are quite low. Whatever the liability standard in your state, you'll need to meet it because it's the state law.
Consider A Higher Level of Protection on a Car Insurance Policy
You'll also want to consider additional insurance coverage and protection for you and your family beyond the minimum liability auto insurance requirements in your state. The minimum liability standards are quite low and would not offer adequate protection in the case of a serious car accident.
If f you are at fault in the accident you'll be left paying for the remainder of the accident damages out of your own pocket if your liability insurance limits are low. Being underinsured puts your family at financial risk.
Your insurance company will probably recommend at least $100,000 bodily injury liability coverage per person and $300,000 bodily injury liability coverage per accident. The Insurance Information Institute recommends both of these amounts as well as $100,000 property damage liability coverage.
Looking for the cheapest liability car insurance premiums may not always be the most cost-saving strategy when electing auto liability coverage. Adding comprehensive and collision insurance, even personal injury protection, to your policy will protect you and your passengers if the worst were to happen.
Find Cheap Car Insurance: Shopping for Liability Coverage or Full Coverage Insurance
Some insurance companies are known for low rates on insurance products and may offer you the cheapest liability coverage. According to U.S. News, the nine cheapest car insurance companies in the country are USAA (for military members), Geico, State Farm, Travelers, Progressive, American Family, Farmers, Nationwide, and Allstate.
To get the absolute lowest monthly premium for car insurance, you'll want to get insurance quotes from several different insurance companies. SmartFinancial has access to more than 200 insurance companies so you are bound to find the coverage and price that you are looking for. Just begin by entering your zip code on this page.
An Umbrella Policy to Enhance Liability Car Insurance
Not sure your auto liability insurance is enough to protect your family in the case of a serious accident? You may want to consider purchasing an umbrella policy. An umbrella policy is an affordable way to get a large amount of liability coverage.
Umbrella insurance is a type of personal liability insurance that covers claims for homeowners and auto insurance policies and watercraft if you should have a boat.
An umbrella policy covers not just the policyholder but other family members as well.
How Much Does Umbrella Insurance Cost?
How much an umbrella insurance policy costs depends on how much coverage you buy, the number of people in your household and the state where you live. The more homes and cars that you own the more an umbrella policy will cost.
According to the Insurance Information Institute, a $1 million umbrella policy costs between $150 and $300 per year.
So consider an umbrella policy if you are concerned about exceeding the liability coverage on your auto insurance. It may give you the additional liability coverage you are looking for at an affordable price.
Other State-Required Auto Insurance Coverages
In addition to liability coverage, your state may require you purchase uninsured motorist coverage and underinsured motorist coverage. The uninsured motorist coverage helps pay for damages caused by a driver who doesn't have insurance. And underinsured motorist coverage protects you in the event of an accident where the other party is at fault and doesn't have enough insurance.
And some states will require drivers to buy Personal Injury Protection (PIP). Also known as no-fault insurance, this coverage pays for the cost of lost wages and medical bills up to the policy limit. PIP coverage will cover these expenses regardless of who is responsible for the accident.
Between liability, uninsured motorist coverage and PIP coverage, some states require quite a bit of insurance for their drivers. Make sure you meet the minimum auto insurance requirements in your state. It is the state law.
Lender-Required Auto Insurance Coverages
Financing your car? Your lender will require you to carry collision coverage and comprehensive coverage for your car.
Collision insurance is coverage that helps to repair or replace your car if it is damaged in an accident with another car or object such as a fence or a tree.
Comprehensive auto insurance covers events that aren't covered by collision coverage. These events include fire, theft, vandalism and damages from weather such as a windstorm, a hailstorm, a tornado and a hurricane.
Both collision and comprehensive insurance coverage come with deductibles. A deductible is the amount you need to pay before your auto insurance company begins to pay for damages on your car or losses.
Choosing a high deductible is one way to lower your auto insurance premium. So if you can manage a deductible of $1,000 or higher, it will help to lower your insurance premium.
Easy Ways to Save on Auto Insurance
With auto insurance, how you pay can save you money. Here are some quick ways to save money on your policy.
Rather than signing up for monthly payments, pay the entire annual amount or six-months amount. Your premium is lower when you pay just once or twice a year.
Try bundling. Bundle your car insurance policy with another policy such as a homeowners policy and you'll save money on your auto insurance.
How you drive your car can help you to save money on your auto insurance, too.
Be a safe and responsible driver. Follow the rules of the road and you'll earn a good driver discount, which will help to lower your auto insurance premium.
Be a low-mileage driver. If you are a heavy commuter you will pay more for your car insurance. If you are a low-mileage driver you will pay less for your car insurance. So drive less and pay less on your car insurance.
A Word on Cheap Car Insurance
While most experts agree that liability only car insurance is often inadequate for newer cars, at least consider adding higher limits to your liability auto insurance. Most importantly, compare rates by entering your zip code below. SmartFinancial can pair you with an insurance agent who can find you the lowest rates available to you for the cheapest liability car insurance rates. You can also see how much more it would cost to add comprehensive and collision coverage.
Cheap car insurance rates for property damage coverage and bodily injury coverage are just a touch away. Answer a few quick questions, which may qualify you for discounts, after you enter your zip code below.
Get a Free Auto Insurance Quote Online Now.
Looking for Auto Insurance?
Compare rates from dozens of companies in less than 3 minutes.
All drivers are legally required to have auto insurance. Learn more about the coverages that are available and the consequences of being uninsured.
Find out what auto insurance covers and explore the different types of coverage including comprehensive, liability and gap coverage.
Auto Insurance is required by law in all 50 states. Learn more about how it works and if minimum coverage is right for you.