Typically, auto liability insurance is an essential vehicle accessory. Road accidents can occur unexpectedly regardless of your driving skills, so being equipped to cover the costs that other drivers incur for any at-fault events and settle their claims in a responsible manner is in your best interest. When considering auto liability insurance, learning about its coverage areas can help you choose the best policy and minimize your vehicular risks. If you’re wondering, “What does liability insurance cover?” here’s what you need to know.
What Is Liability Insurance?
Liability insurance is a type of insurance that covers the cost of damages resulting from auto accidents. As a driver, you’re likely to need it to drive legally. This auto insurance type covers different things, such as the bodily injury of a driver or passenger of a vehicle. There are different policies available that vary based on the types of coverages and the amount an insurer provides for each.
The benefits of this insurance type can vary based on factors such as the amount of coverage you purchase, the insurer’s own corporate policies, and any unique characteristics you possess that entitle you to discounts. For example, a minimum liability insurance policy will not give you the same amount of protection against financial and legal issues as a full liability-coverage policy in the event that you cause an accident.
There are several benefits of getting auto liability insurance:
- It enables you to drive legally in states that allow only drivers with liability insurance.
- It can enhance your confidence while driving.
- It enables you to avoid overextending yourself to settle unexpected liability claims.
- It minimizes your legal risks regarding auto accidents for which you’re liable.
- It enables you to drive responsibly and contribute to your community.
What Can Liability Insurance Cover?
If you’re in the market for liability insurance, learning about the different coverage areas is important. Here’s a breakdown of what you can expect from a standard liability insurance package:
- Bodily injury per person: Liability insurance covers the bodily injury costs of each person affected by the auto accident for which the policyholder is responsible. Each claimant has a maximum amount that they can claim under this policy. Coverage areas can include the loss of wages, medical bills, emotional distress, and legal fees.
- Bodily injury per accident: Providers offer protection that covers bodily injury for the entire accident. This amount is the maximum that the claimants can recover from your insurance provider.
- Property damage per accident: In the event of an auto accident, you can rely on your liability insurance to help others recover losses for their property damage. Types of damage include vehicle damage, building damage, and damage to other objects, such as lampposts.
What Does Liability Insurance Not Cover?
There are several things that liability insurance does not cover, such as:
- Cost of repairing your vehicle: If you’re involved in an accident that damages your vehicle, liability insurance does not cover your vehicle repair costs. To minimize your financial and property risks, it’s best to invest in collision coverage in addition to liability insurance. By doing so, you can cover the costs of your vehicle repairs.
- Vehicle damage caused by weather events: Liability insurance does not cover damages resulting from certain weather-related events, such as hail or floods. You need comprehensive insurance for that.
- Personal injuries to the policyholder: Liability insurance does not cover your medical expenses if you’re involved in an accident. You need personal injury protection (PIP) for this purpose.
How Does Liability Insurance Differ From No-Fault Insurance?
No-fault insurance, which is also called personal injury protection (PIP) insurance, is a type of protection that can complement liability insurance. In no-fault states, your state is likely to require that you purchase liability insurance in addition to PIP. Here’s what you need to know about the difference between the two types of auto insurance.
- Coverage regardless of fault: In some states, such as Florida, Kentucky, and New York, it’s not necessary to prove fault when making an insurance claim under PIP. This differs from liability insurance, under which proving who is responsible for an auto accident is essential.
- PIP for your medical bills: Personal injury protection (PIP) is the policy that drivers can depend on to claim the costs of their medical bills and loss of income, regardless of whether they are at fault for an auto accident. Unlike the protection offered via liability insurance, which covers other people’s expenses, your PIP will cover the costs of your personal injuries even if you’re at fault.
Liability Insurance Specs
Here’s what you need to know about liability insurance when shopping for it:
- The three numbers: Each liability insurance offering will have three numerals that express the limits of what the insurer is offering in relation to personal injury and property damage. These limits differ between providers. For example, if the limits offered are 30,000/50,000/25,000, the provider will pay $30,000 for personal injuries per person, $50,000 for personal injuries for the entire accident, and $25,000 for property damage for the accident, respectively.
- The deductible: Auto insurance providers will require you to commit to paying a certain amount of the costs in the event a claim is made. You can shop around to find a deductible that fits your expectations.
- The premium: You will be expected to pay a monthly premium toward maintaining your liability insurance protection. Policies that offer more protection, or larger amounts of money to cover costs, will require higher premiums. However, the price-based difference between a $30,000 limit for personal injury and a $100,000 limit for the same can be as affordable as $9! So it’s best to consider paying a little extra for better liability coverage.
Keep in mind that liability insurance is only one part of protecting yourself, so you do need to consider getting other types of coverage, such as collision insurance, so you will be fully protected in the event of an accident. Additionally, it’s best to consider how state laws affect liability coverage.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.
