Liability Insurance Requirements

Types of Liability Insurance

Auto liability insurance protection comes in many types.

However, when it comes to state liability insurance requirements, the most two common types are:

• Bodily Injury: Pays for the medical expenses incurred by others as a result of your actions. Expenses include hospital care, doctor visits, medicine, rehabilitation, home-health care, lost wages and funeral costs.

• Property Damage: Pays for expenses you cause to other individual's property. Examples of property include cars, trees, mail boxes, fences, poles, houses and pets.

Liability Insurance Requirements

Almost every state requires its drivers to be protected by liability coverage, although most offer other ways of meeting their proof of financial responsibility laws.

Each state sets its own minimum coverage limits for car liability insurance. This refers to the maximum amount of money an insurance company will pay under the terms of a policy.

Usually insurers express these limits on a per-person and per-accident basis. For instance, with bodily injury insurance, you might have a maximum bodily injury limit of $20,000 per person, with an accident cap of $40,000.

So, for example, if you had three passengers in your car and each sustained $15,000 of medical expenses ($45,000 total), your carrier would only pay $40,000.

Many states require other types of insurance in addition to bodily injury and property damage. Usually, this means underinsured and uninsured driver coverage, which pays for expenses caused by a driver who either carries an inadequate amount of car insurance or doesn't have any insurance.

Do You Have Enough Liability Insurance?

Well, only you and your insurance company can answer that question for sure, but chances are if you only carry the minimum amount of insurance required by your state, you don't have enough protection.

Why?

Because most states have very low minimum limits. If you cause a moderate or severe accident, you easily surpass those limits and be forced to pay for the remaining damages on your own. Doing so could devastate your savings and leave you in debt for years.

So, it's smart to do some research, consult a few trusted sources, and find out if you have a reasonable amount of liability protection. If you don't, shop around online to find the best rates for this additional protection, and take then take the appropriate action.