What Does Auto Liability Insurance Cover?

Written by S. Danilina | Fact checked by The Law Dictionary staff |  

Liability car insurance covers damages to other vehicles or bodily injury to others resulting from an accident that the insured individual caused. Auto liability insurance does not cover the cost of repairs done to a personal car of the insured. Liability car insurance is also one of the few mandatory coverage options required in every state. However, the minimum limits of coverage vary and depend on the state laws of the insured person.

The liability coverage options of an auto insurance policy have different limits that are separated by slashes, for example, 15/40/30. It means the amount of monetary coverage for bodily injury per one person injured ($15,000), total bodily injury per accident ($40,000) and coverage for property damage ($30,000). For each liability limit, the maximum payout would not exceed the limit the policy holder has set. It is essential to set bodily injury liability limit per accident high enough to be able to pay the medical expenses incurred by multiple people. If the set liability limit is not high enough to pay for all damages caused, the policy holder is still responsible for paying the remaining balance and can be sued for not paying it off. Varying levels of the liability coverage insurance are available.

Other types of auto insurance coverage available on today’s market are comprehensive insurance, collision insurance, uninsured/underinsured motorist coverage and the medical payment coverage. The collision policy covers damages to a car that are incurred as the result of a collision. On the other hand, comprehensive insurance covers the damages caused by a non-collision incident, such as hail or flood. If the additional medical payment coverage is purchased, it will cover costs above the liability limit. Uninsured motorist coverage pays for damages to a car caused by the at-fault driver without an auto insurance.

As it was stated above, if the insured carries liability insurance only, the cost of damages to his own vehicle will not be covered by his or her policy. Thus, purchasing collision and/or comprehensive coverage is a good idea if an insured person does not want to take the risk of not being able to afford to repair his/her car. It is also important to understand that the majority of insurance policies do not provide coverage to replace a totaled car, but rather are required to pay the Blue Book value of the vehicle. As a result of depreciation, the paid off amount for a totaled car may be significantly less than the cost of a new car. If an insured person is interested in more financial security in the event of an accident, he or she needs to discuss buying additional coverage with the insurance agent.

When a person is ready to buy auto liability insurance, he/she can choose a policy from a huge variety of the insurance companies available today. The majority of liability policies provided by different companies work the same way and offer the same service. Thus, it is advisable to check around for the most economical insurance policy. The insurance agents are familiar with the minimum insurance liability requirement in the specific state and can consult on purchasing at least the minimum amount of coverage required by law. However, it is recommended paying for the maximum affordable coverage limits. Many websites provide the comparison of the insurance rates provided by different insurance companies. Furthermore, the insurance companies offer the discounts to its insured for having multiple insurance policies or maintaining an accident free driving record.

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