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What Does Auto Liability Insurance Cover?

What Does Auto Liability Insurance Cover?

Auto liability insurance covers damages resulting from an accident with another vehicle. It is the most basic form of automobile insurance and is required in all 50 states to legally register and operate a motor vehicle. Each state has different insurance minimums however so it is important to know these when purchasing automobile insurance to make sure you and other drivers are adequately protected if a accident should occur.

There are many different types of automobile insurance and different riders which can be added to provide more protection. With respect to required state minimums for automobile insurance, liability coverage is mandatory and protects other drivers if you should get in an accident and cause damage to the other vehicle or person. It is important to understand the limitations of liability only coverage because it will not pay for medical bills for yourself or damage to your vehicle.

When purchasing auto insurance, coverage is outlined as a series of three numbers separated by forward slashes, each of which provide the total dollar amount for a type of injury or damage. For example liability insurance may be specified as 10/30/20 which would mean $10,000 of coverage for one person's bodily injury, $30,000 of total bodily injury coverage for a single accident and $20,000 of coverage for property damage. Each of these values can be increased for additional premium costs from your auto insurance company if you desire more protection.

It is important to purchase a reasonable amount of liability insurance coverage which is usually more than the state minimums. If you're in an accident, and your liability auto insurance only provides property damage coverage of $25,000 and you slam into an expensive M5 BMW causing $40,000 worth of damage, you will probably be personally liable for the additional $15,000 in damage. In fact, if a civil lawsuit is filed, a court can find in the plaintiff's favor and award a judgment for the additional money. This may result in seized assets or garnished wages until the judgment is satisfied.

There are specific times when liability auto insurance coverage is recommended. If you need your car for work and are unable to pay for full auto insurance coverage it may be necessary to temporarily purchase liability only coverage. The more common scenario however, is to downscale from full coverage auto insurance to liability only when the price of the vehicle is only a few thousand dollars. If the car is totaled in an accident, the cost of repairs is often more than the vehicle's blue book value. If you go with liability only coverage you will be forgoing comprehensive and collision, uninsured motorist and additional medical coverage which may leave you worse off in the event of a serious accident especially when driving a more expensive vehicle.

When looking to purchase liability only auto insurance it pays to shop around and speak with multiple agents. These agents can provide additional information about average cost of repairs, whether or not your vehicle should have more insurance coverage and what the additional costs may be for different types of coverage. They will also be familiar with the state minimum liability coverage requirements and recommend an appropriate amount, often above the minimum, to adequately protect yourself and personal assets. If you own a home, you may be able to save additional money by bundling your auto and home insurance together for lower overall premiums.