When purchasing car insurance, providers often have two main coverage options, full coverage, and liability. Auto liability insurance is required by law as it helps pay for expenses the other party sustains in an accident. If you have a car loan, the lender normally requires full coverage insurance to pay for all costs associated with a claim. However, individuals that own their vehicles outright often use liability insurance to save money on annual premiums.
What Does Liability Insurance Cover?
Liability insurance will pay for repairs to another person’s vehicle along with medical costs if you are found responsible for causing damage. Auto liability insurance typically has two coverage areas;
Bodily injury liability
Property damage liability
With bodily injury liability, the insurance company will pay for medical expenses to the other party. If you fail to have insurance, you could be liable to pay all medical costs filed by the other party. Property damage pays for expenses associated with damage to the other car or possibly other property involved in the accident.
Limits on Liability Insurance
Insurance companies do have limits on insurance claim coverage. Each state has regulations on insurance companies and sets a minimum coverage limit related to bodily injury and property damage. With property damage liability limits, the insurance provider will pay to repair damage up to a certain amount, but they will not exceed the maximum payout. The same limitations apply to bodily injury liability as some policies stop paying after $50,000. Review your policy limits and consider increasing them if you have small amounts that could cause financial devastation if you do not have the income to pay for costly bills. Usually, insurance companies will set limits based on a scale of 25/50/10, which means there is a $25,000 per person bodily injury limit, a $50,000 per accident bodily injury limit, and a $10,000 property damage limit. Review coverage limits to determine the best option for your needs and to make sure you are getting fair rates.
Cost of Liability Insurance
How much do you expect to spend on liability insurance? The vehicle’s age, make of the car, your age, driving habits, and other factors all makeup part of the cost of liability insurance. The amount you pay normally increases as you opt for a higher coverage limit. Work with our car insurance comparison tool to look at current rates and find the best car insurance policy for your needs.
Increasing auto liability limits is wise as you add more drivers to your policy. Younger drivers are at higher risk, and insurance companies will raise your rates for adding teenage drivers. Compare rates often when you are dealing with multiple people on your policy to find the appropriate coverage.
Limitations to Liability Insurance
What is the most significant downfall to liability insurance? It only pays for the costs to other people and property, not your own. If you are left with a broken-down vehicle, you need to pay for all the repairs alone. What about injuries you sustained during the crash? You will need to pay for the medical expenses associated with injuries in an auto accident. It helps to work with your insurance provider to find out what they do and do not cover, and ask for discounts! Auto insurance providers often have several discounts that members do not even know about. Compare rates annually to make sure you are getting the best coverage and rates available!