4 Things You Should Know About Auto Insurance Liability Coverage

Car insurance companies offer different forms of coverage. Examples include liability, collision, and comprehensive coverage. Understanding the coverage forms will help you know which ones to purchase. Below are four things you should know about liability coverage.

1. The Coverage Only Compensates Third Parties

Auto liability coverage is exclusively for third-party claims. The coverage compensates for property damage, bodily injury, and associated losses third-party accident victims might have. The only benefit you have is that the victims won't come after your money or assets to compensate for their losses. The insurer will also provide you with a legal injury defense.

Don't expect your insurance company to repair your car or pay your medical bills if you only have liability coverage. Get collision or comprehensive insurance to shield you from such losses.

2. The Coverage Is Mostly Mandatory

Almost all states require auto liability coverage for all motorists. You should not even take a quick drive around the block if you lack the coverage. The state government even detriments the minimum coverage limit.

The requirements make sense because you can cause an accident even a minute after starting to drive. As mentioned above, liability coverage means victims of your accident can get their deserved compensation.

3. The Coverage Has Different Sub-Limits

Auto insurance companies split liability coverage into different limits. There is a sub-limit for:

  • Each accident victim with a bodily injury
  • All accident victims per accident
  • All property damages per accident

Consider a case where you lose control of your car and hit two other cars. If you have a $25,000/$50,000/$30,000 policy, the insurance company can only:

  • Compensate each occupant of the two cars for a maximum of $25,000
  • Pay a total of $50,000 as bodily injury compensation for the accident
  • Pay a total of $30,000 as property damage for both cars damages

Read and understand your policy's limit before you face a liability claim.

4. The Legal Limit Might Not Be Enough

State liability limits are not always enough to cover damages arising from serious accidents or involving multiple parties. For example, your state's limits might not be enough to shield you from liability claims after a four-car accident.

Evaluate your limits to determine if you need enhanced overage. Otherwise, you might have to top up the difference if you cause an accident and your insurance coverage limits fall short. Talk to your insurance agent to help you determine appropriate limits for your circumstances. For more information on auto insurance, contact a professional near you.