Liability Auto Insurance

Liability auto insurance is a type of auto insurance policy that covers an insured driver for any damage inflicted to other people's bodies and property during a car accident. Auto insurance policies can cover the full spectrum of damages, court costs, injuries and other expenses related to an accident, but determining which type of coverage is right for you is vital to finding a policy that fits your needs and your situation.

All states require that drivers carry certain levels of auto insurance, and those laws apply to liability coverage as well. In addition to meeting these minimums, auto coverage is vital to protecting yourself, your car, your security and your financial stability. Understanding the ins and outs of liability vehicle insurance is the first step before you get quotes for your policy and hit the road as a wise, insured driver.

By the Numbers

The coverage amount of this type of auto insurance policy is expressed as a series of three numbers. For example, a state's minimums may be 30/60/15. The first number is the maximum amount the insurer will pay for injuries to a single person in one accident. In this example case, that cap would be $30,000. The second number is the total amount the company will pay for all injuries in a single accident, in this case $60,000. The last number in the chain refers to the max amount the insurer will pay for property damage in a single accident, which is $15,000 in the example. So in the example state, the minimum coverage for a driver would be $30,000 for injury coverage for each victim in an accident, $60,000 for total injury costs in one accident, and $15,000 in coverage for property damage.

Be wary of these minimums, though. Just because a state's laws set the coverage floor at a certain dollar amount does not mean that is the right amount of non owner auto coverage - you often want to have more auto coverage than the minimum level. In the example above, if an auto accident you were involved in caused $75,000 in personal injury to a passenger in another car, your liability auto insurance would only cover one-third of that amount, $25,000 if you had only the state's minimum coverage. You would personally be responsible for paying the remaining $50,000. Some states, known as "no-fault" jurisdictions, have rules that protect drivers from this, so be sure to check local state laws before getting your auto quotes.

Liability or Full Coverage?

One common mix-up among drivers searching for liability auto insurance is whether to buy full coverage insurance. A full auto policy has coverage beyond what's covered in a liability car insurance plan. Full plans have comprehensive coverage and collision coverage. Collision coverage pays for any damage to your own car, and comprehensive coverage pays for car loss or other damage to your car from things like theft, vandalism or natural disasters, even if the damage isn't sustained in a car accident.

Full coverage - comprehensive and collision coverage in addition to liability coverage - is more expensive, and rightly so, as it covers a much broader spectrum of possible costs that the insurer would have to pay. Drivers can get policies that have comprehensive coverage but no collision coverage. However, no policies offer collision without comprehensive. It gets confusing, but taking the time to understand the differences is the key to getting the best insurance plan, especially when thinking about a liability automobile insurance plan.

Liability Automobile Insurance Needs

The amount of liability automobile insurance you need depends on a number of factors. If you need to cover a business, the coverage will need to be higher, but commercial insurers usually limit liability coverage because it often covers rental cars or company cars. And be wary that some personal liability plans don't allow any business-related coverage.

Besides business coverage, consider the number of drivers and passengers that will be covered under your plan. The more drivers covered on the plan, the more car rides will be taken, which will increase the chances for accidents that need coverage. In the same vain, any carpooling or driving kids to school greatly increases the need for coverage. The general rule is that with an increased number of people driving or riding in the auto, the more coverage needed.

While there is no cut-and-dry way to determine how much liability auto coverage you need, a basic rule is to carry no less than your net worth minus the possible cost of driving risk and how much you can pay in premiums. Consider all the factors that apply to your situation when determining how much liability auto insurance to carry. Finding the right quote will save money in the long run and keep your mind on the road instead of on the consequences of an accident.


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