When you purchase a vehicle, whether it's new or new to you, you're
required to carry liability auto insurance. When you find yourself at
fault in an accident, liability insurance covers the expenses of
property damage and injury incurred by others involved. Most people
bundle liability with collision (which helps to cover your own injury
and property damage costs), but there are some instances where
liability-only car insurance is a viable option.
What is liability insurance?
Liability car insurance is a safeguard against a driver's personal
assets in the event that they cause an accident that results in bodily
harm or property damage to another.
Both components — bodily injury and property damage — are third-party
benefits, one that the driver cannot use personally. Liability insurance
is mandated by law in 49 of 50 states, with varying limits, and protects
those who have suffered loss. Both components — bodily injury and
property damage — are third-party benefits, one that the driver cannot
use personally. Liability insurance is mandated by law in 49 of 50
states, with varying limits, and protects those who have suffered loss.
Who should choose a liability insurance policy?
The short answer is
everyone should carry liability car insurance, whether
they are a new or established driver. Liability insurance safeguards the
individual's assets should he cause an accident that injures someone or
damages their property. Instead of paying out of pocket, the insurance
policy covers qualifying property damage and medical expenses related to
What does liability insurance cover?
There are two main elements to liability auto insurance:
bodily injury and property damage. Each type defines what's
covered and has its own limits.
Bodily injury - bodily injury liability car
insurance coverage, or BI, covers the medical expenses of the injured parties if you're
found to be at-fault in an accident. It also covers loss of income
if the injuries keep the person from working. All states, except
Florida, require drivers to have BI insurance.
Property damage - if you're in an accident that
causes damage to a vehicle or other property, this type of insurance
covers the cost of repairs up to the policy limit. Abbreviated as
PD, it also covers the driver's court and defense costs if he or she
is sued as a result of the accident. All 50 states require PD
The limits for each component vary by state, and your auto insurance
agent can explain the minimum requirements.
Expenses not covered by a liability insurance policy
While liability insurance coverage extends to property damage and
medical bills of others injured as a result of an at-fault accident, it
does not cover the losses of the person who caused the accident. That's
why there are other types of insurance to consider:
collision and medical payments.
Collision - Collision insurance is designed to cover
damage to the policyholder's vehicle in the event of an at-fault
accident. This type of insurance is required by lenders if the car is
under a loan or lease. Once the vehicle is paid off, it becomes
optional but is still recommended for those who drive vehicles with
good market value.
Medical payments - Medical payments coverage helps
cover the cost of medical bills of the policyholder and potentially
any passengers in the vehicle at the time of the accident, regardless
of who is at fault. It covers deductibles and co-pays, hospital or
doctor visits, surgery, prostheses and x-rays, nursing services and
Liability auto insurance providers
All insurance companies offer liability car insurance coverage, but at
their own discretion. If you have many accidents within a short
period of time, you may be deemed high-risk and denied
coverage. Speak to your agent about the costs associated with the policy
and shop around for the cheapest liability car insurance quotes.
Choosing the right amount of coverage
Property damage - The typical amount of PD coverage
on a liability car insurance policy is $10,000. The amounts, however,
can vary between $5,000 and $25,000, depending on the state-required
Bodily injury per person - Bodily injury per person
defines the limit that a single person can collect in damages. This
includes the total sum for medical expenses and treatments, as well as
lost wages, for a single person.
Bodily injury per accident - Bodily injury per
accident is the total amount that a policy will cover for injury
expenses. For example, in a case where the policy is packaged 25/50,
the policy may pay out up to $25,000 per person but will not cover
more than $50,000 per accident. In serious accidents, this could
result in the policyholder facing out-of-pocket expenses.
Liability insurance coverage and out-of-pocket costs
When it comes to liability car insurance coverage, “less is more” is not
a good policy. While each state has a mandated minimum,
it's always a good idea to purchase more coverage. More
coverage can protect you and your assets and reduce the amount you have
to pay out-of-pocket in the case of an accident.
More liability coverage means less liability
If you're still on the fence about how much liability auto insurance
coverage to purchase, it's worth considering that
the more you purchase, the less liable you are to pay
out-of-pocket. If your liability coverage runs out and the injured party still has
treatment ahead of them, you can be legally responsible for paying those
fees and could be sued in court, putting your personal assets at risk.
When you purchase liability auto insurance, be sure to speak with your
agent and determine what the appropriate amount of coverage should be.
Insurance providers often have minimum recommendations that satisfy
state and local statute requirements, but you can also opt for more
coverage, and this is one case where it's better to be safe than sorry.
Winter is coming and in many parts of the country, winter weather can be unpredictable. Suddenly every day tasks like driving become more difficult due to snow, ice, or freezing rain. According to the NHTSA, 17% of all vehicle crashes occur during winter conditions. It is important to take extra precautions when it comes to driving in these circumstances.
While gap insurance isn’t required to be a part of your insurance policy, this type of add-on coverage can financially protect you from a total loss. If you owe more on your loan than your car’s current market value, you are considered “underwater” or “upside-down” on your loan. In order to avoid making payments on damages that exceed the value of your car, it may be worth it to consider adding gap insurance to your policy.
Almost every state requires all drivers to have car insurance. Without it, you’re prone to significantly higher financial loss whether you’re involved in an accident or your car gets stolen. Insurance protects you, your passengers, and your car in the case of an emergency. If you’re new to shopping for car insurance, it’s important to shop around for the best rate and terms possible. Here’s a comprehensive guide on everything you need to know to buy car insurance.
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