Auto Liability Insurance

Auto liability insurance is the only mandatory auto insurance required in most states. Some states require more coverage, but liability is mandatory in all but a couple of states.

There are two types of auto liability insurance: bodily injury liability and property damage liability.

• Bodily injury liability is designed to pay the medical expenses and lost wages in the event of an accident. There are two set limits on bodily injury auto liability insurance. One limit is the amount that will be covered for each person that is injured in an accident. The second limit is the total amount that your insurance company will pay for the entire claim.
• Property damage liability insurance pays for damage that is sustained to someone's property. This also pays for an attorney and the settlement if you are sued. The limit of property damage auto liability insurance will probably be the same amount as your collision and/or comprehensive limits.

Most states define auto liability insurance in terms of a series of three numbers. For example you might see a series of numbers that look like this: 10/20/30.

• 10 – This signifies the maximum amount, in thousand of dollars that an auto insurance company will pay out for each person that is injured.

• 20 – This is the maximum amount, in thousands of dollars that an auto insurance company will pay out for all bodily injuries in one accident.

• 30 – This signifies the maximum amount, in thousands of dollars that an auto insurance company will pay out for property damage.

These represent the minimum amount for a particular state. You may choose a policy that will pay out more in the event of an accident since medical expenses can reach in the thousands of dollars, but this will increase the price of your monthly insurance premium.