Auto Liability Insurance: Bodily Injury Liability and Beyond

June 19, 2013

Auto liability coverageis the minimum insurance requirement in most states. Auto liability insurance fulfills car insurance requirements by making sure the other driver is protected if you are at fault for an accident. If you're considering auto liability insurance coverage, you should know about some of the limits and requirements associated with it.

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Requirements to Apply
In order to be eligible for auto liability coverage, you need only be a licensed driver. In fact, in most states it is illegal to drive without having this coverage, so the application requirement is simply that you have your driver's license.

Requirements Auto Liability Coverage Fulfills
In most states, auto liability coverage fulfills the minimum legal insurance. Liability coverage usually covers 2 separate types of liability: bodily injury and property damage. In case of an accident where you are at fault, the other driver is covered up to a certain amount should he be injured in any way by the collision, and his vehicle is covered up to a certain amount for any repair costs. The amount liability coverage must minimally cover varies by state, so ask your local DMV about these requirements.

Limits to Minimum Insurance Coverage
Just because you're fulfilling the minimum state insurance requirements, does not mean that you are personally covered. Liability insurance covers just that: liability. If you are at fault for an accident, this insurance covers only your responsibility to the other driver and does nothing to help you. You have to pay for your own injuries and damages. Even if you are not at fault for an accident, if the other driver does not have insurance, you are not covered. Since auto liability coverage does not protect you or your vehicle in any way, whether you are at fault or not, most people who can afford it find it worthwhile to pay for more comprehensive coverage.

Why Get Liability Coverage?
For people who may not currently have the means or the desire to get comprehensive auto insurance, procuring minimum liability coverage allows them to legally drive. Liability coverage is also useful if you are at fault for an accident and the other driver is badly injured or the other car is destroyed. In this case, liability coverage may save you a lot of money--just be aware that it won't pay for your own ruined car, should this be the case.

Can I Drive without Liability Coverage?
In most states, you cannot legally drive without this coverage. Some states, such as Ohio, allow the minimum coverage requirements to be bypassed, if you can prove that you have sufficient funds available to pay for damages yourself. Check with your DMV for more specific information about your particular state.

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Bodily Injury Liability

Bodily injury liability is a specific feature of a driver's liability coverage auto insurance policy that protects him or her against the costs of injuring the other people while behind the wheel. The word "liability" indicates that this is a kind of insurance that does not protect you as a driver, but instead, helps you deal with situations where you are at fault.

What Bodily Injury Liability Covers
Bodily injury, as a specific type of auto liability insurance, covers the costs and associated costs of injuries to drivers and passengers of another vehicle due to a collision with your vehicle where you are at fault. It covers medical bills, loss of wages, pain and suffering costs, trial costs and other associated legal fees.

What Bodily Injury Liability Does Not Cover
Bodily injury liability does not cover the cost of injury to you, the insured driver, or passengers in your vehicle. It also does not cover any property damage or damage to involved vehicles. This is strictly a liability medical insurance. A separate insurance component called "medical coverage" provides for the cost of injuries to you and passengers riding in your vehicle in incidents in which you were at fault.

Additionally, drivers take out extra insurance called uninsured or underinsured motorist coverage, which covers the cost of injury to themselves and their passengers in accidents where they were not at fault. Uninsured or underinsured motorist coverage pays on claims when the uninsured driver who is at fault cannot pay.

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Considering Bodily Injury Liability Coverage
For drivers who find all of this confusing, the good news is that basic bodily injury liability coverage is included in most state-mandated auto liability policies. However, it might be a good idea to think about taking out extra bodily injury liability insurance if your state's minimum does not seem like enough to pay a theoretical claim. With the costs of healthcare skyrocketing, those involved in a case often find that the state minimum is not enough.

Property Damage Liability Insurance

This insurance pays for any damages your car does to someone else's property. Most often, this refers to damage done to another vehicle by your vehicle. That's not the limit of it though. If you were to drive your car through someone's fence and into their house, property damage liability would cover it. It would apply to the fence, any damage to the yard and any damage to the house. If you hit a person in the process though, the property damage liability coverage would not include any medical bills or such. That's a different type of coverage. This coverage also handles any kind of legal representation you might need if someone files a lawsuit against you in connection with the vehicle accident. It's important to note that property damage liability will not cover damage to your car. There is a different type of coverage for that. If the other property damaged belongs to you though, it should be covered by your property damage liability insurance.

How Much Coverage Should I Have?
Your state sets a bottom limit of coverage you are required to carry. That coverage might not be enough though. In some states, you are required to carry $10,000 of property damage liability insurance. That means that the insurance company will pay for the first $10,000 in damage caused by your car in any one accident. So, what if you hit a brand new car and total it out? You've probably exceeded the amount of your coverage. Where does the rest of the money come from? It would be your responsibility. If you don't have the money to pay it, the person whose property you damaged could be given your property in a judgment. It's a good idea to make sure you have enough coverage. In some ways you can't have too much. See how much different levels of coverage will affect your premium and get what you can afford.

Property damage liability might not be the only type of insurance you need when operating a vehicle, but it is definitely important. Don't overlook it and just go with the default amount required in your state. At least look the numbers over and think about it before you get your policy.

Liability Only Coverage

Minimum liability coverage is the lowest amount that most states let you get away with for insuring your vehicle. Lots of drivers add more to their policies, for more coverage in a claim situation. When you look at some of the recommended insurance packages versus a liability only coverage, you see that purchasing only the minimum liability can bring a lot of savings over the months, if you are not involved in any accident or claim situation.

Avoiding the "X Factor"
For some auto insurance consumers, some of the extra coverages are not very clear. If you have only a vague idea of how and when extra coverage will pay out, you may not want to invest in this kind of unknown policy addition.

More of Your Own Financial Responsibility
Buying just the minimum liability and keeping assets on hand to cover a worst-case scenario is something that consumers have a right to do. Limiting the coverage that you buy is, for some, a way of relying more on savings and existing liquid assets than paying out a bunch of money to an insurance company every month.

High Dollar Liability
Insurance companies recommend getting higher liability coverage for a reason. For the vast majority of drivers, these insurance products are a very important form of assistance. Drivers who could not pay out on accident claims themselves can rely on the insurance company to pay any big claims. This helps protect many households and individuals from bankruptcy related to an auto accident. Going with liability only policies will not offer as much of this kind of protection, and according to some experts, it's usually a very bad idea.

No Coverage for Your Vehicle
Extra policy inclusions like collision and comprehensive insurance cover damage to your vehicle. A liability only policy does not have these additions. If you paid out a lot of money for a car or truck, you want to make sure it will be around for you to drive for years to come. Many drivers choose to add collision and comprehensive insurance for a vehicle to safeguard their investment.

No Extra Protection
Other features offered by larger auto insurance policies include coverage for being hit by an uninsured or underinsured motorist, coverage for roadside assistance, rental car coverage, and much more. All of these things can be helpful to provide real peace of mind on the road.

What Are Insurance Liability Limits?

The liability limits are caps to amounts that an insurer will pay the other parties on behalf of a driver who has damaged other vehicles or injured other people. If the damage amounts exceed the liability limits, the at fault driver must pay the balance.

How Is Liability Coverage Assessed?
A liability coverage is generally a set of 3 numbers, such as 100/300/300. The first number is the maximum amount the insurer will pay per person for injuries. The second number is the maximum amount the insurer will pay for injuries on the entire incident. The third number is the maximum amount the insurer will pay for property damage. These figures are useful in talking to an insurance company representative to really understand how much the company would pay in any claim scenario.

Why Get More Liability Coverage?
Many drivers choose to raise the liability limits from the state minimum, either because they have substantial assets, or they don't want to see their credit ruined in the event of an accident. Lots of financial experts recommend raising the liability coverage to something like 100/300/100, or even 200/500/200, for making sure that the costs of claims would be covered in most crashes. A larger vehicle that is able to do more damage might also be a factor in how much liability insurance a driver needs. It may be hard to know what the full damages of a crash might cost in any situation, but some basic research about accident damage rates can show a driver just how minimal their state-mandated liability coverage may be.

Understanding Car Insurance Liability Limits
If anyone in a car accident is injured, or if anything is damaged, the auto liability coverage will take care of the costs of the medical attention required or the costs of the damage, up to the amount you set in your insurance policy, per occurrence. When deciding on the amount of coverage you will purchase, carefully consider the fact that any costs not covered by your liability insurance will become your own personal financial responsibility. Understand that if you or anyone driving your car causes an accident that leads to injury or damage, the liability for all of the injury and damage could be your responsibility.

Drivers Covered

Liability coverage auto insurance will insure anyone driving the car, so long as they have permission from the car owner or the car owner's spouse. This insurance also protects a driver and the driver's spouse when driving a car that they do not own. It also protects a car owner and the car owner's spouse if they are towing a trailer behind their car. Consider the ages of the people who will be driving the car. Younger drivers can tend to be less careful than older drivers, and on average experience more accidents. Understand that you share in the liability of your children if they are driving the car.

Protecting Your Assets
Calculate the amount of all of your assets. Liability insurance is purchased to protect you from losing these assets in lawsuit arising from a vehicle accident. Consider your career. People who earn a larger salary are likely to experience greater lawsuits.

Property Damage
Understand the value of most automobiles on the road. Many have a value over $25,000. Basic liability insurance policies limit the coverage to that amount. Consider a policy which will give you more coverage for property damage.

Professional Advice
Be sure to seek the advice of a professional automobile insurance agent for the best coverage for your situation. Have the agent explain in detail every item on the policy.