Liability Car Insurance
When you cause an accident, you will be held accountable for injuries or property damage resulting from that accident.
Costs of injuries and property damage can be expensive. In fact, they can be so expensive that they are generally well out of the average person’s budget. If you are unable to pay, you risk losing your assets, such as your home, in lawsuits.
The best way to protect yourself from huge financial losses after an accident is by having liability insurance.
Types of Liability Coverage
Liability insurance is the most commonly required type of car insurance throughout the various states. Even in the rare state that does not require liability car insurance, you may find that having liability insurance is worth the financial security.
Liability insurance is composed of the following coverage types:
- Bodily injury coverage – pays for injuries suffered by others in an accident you caused.
- Property damage coverage – pays for damage you cause to another person’s property (typically their vehicle) in an accident.
You can learn more about these coverage types by reading our Bodily Injury and Property Damage Coverage page.
Liability Coverage Limits
Each state that requires drivers to have liability insurance has its own set of minimum limits your car insurance policy must meet. The limit refers to the maximum amount your car insurance company will pay in a claim.
You may notice 2 numbers associated with bodily injury liability coverage:
- The first number is the limit covered per person in an accident.
- The second number is a total limit covered if 2 or more people are hurt in the accident.
See the example below to see how minimum limits are typically written out.
Example of Minimum Liability Insurance Limits
While minimums will vary amongst states, you’ll often see them listed as follows:
- $15,000 for bodily injury, per person.
- $25,000 for total bodily injury.
- $10,000 for property damage.
In many cases, you’ll see the minimum limits written as 15/25/10.
Does Liability Insurance Cover Personal Damages?
Liability insurance only pays for bodily injuries or property damage suffered by others when you are at fault in an accident.
Your own injuries or property damage are not covered through liability insurance.
For information on how to protect yourself when you are hurt in an accident, visit our Medical Payments Coverage page.
To learn how you can get financial protection for damages to your car, visit our Comprehensive and Collision Coverage page.
Liability Insurance Costs
Different factors can go into determining the cost of liability insurance. When comparing car insurance quotes, keep in mind that the following may factor into your rates:
- Your driving record.
- The limits you choose for each coverage.
- You may find that your state’s minimum limit requirements do not provide adequate financial protection.
- Car insurance companies generally offer higher limits at an increased rate.
- Your gender.
- Your marital status.
- Your credit score.
- This is not applicable in all states, as some states make it illegal for insurance companies to use your credit score when determining premiums.
No-Fault Insurance and Liability Insurance
If you live in one of the handful of states that requires no-fault car insurance, or personal injury protection coverage, you may still required to buy liability car insurance.
While your state is considered a “no-fault state,” this does not mean that fault is taken completely out of the question after a car accident.
When you are found at-fault for an accident, the other person’s no-fault insurance will pay for his own bodily injury first. You can still be held responsible for injury-related costs the other driver’s no-fault insurance was unable to pay.
Your liability insurance will kick in at this point to help you cover these costs.
Umbrella insurance is a type of insurance that provides broad financial protection by working in conjunction with most types of liability insurance you have, including:
- Liability auto insurance.
- Liability homeowner’s insurance.
- Liability boat insurance.
Umbrella insurance is applied AFTER your your liability insurance limits have been used.
If you want further financial protection from injuries or damages you are found responsible for, it is a good idea to purchase this type of car insurance coverage.