Liability auto insurance

What is ‘Automobile Liability Insurance
Automobile liability insurance is financial protection for a driver who, while operating a vehicle, harms someone else or their property. Automobile liability insurance only covers injuries or damages to third parties and their property, not to the driver or the driver’s property. The two components of automobile liability insurance are bodily injury liability and property damage liability. Automobile liability insurance does not have a deductible.

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BREAKING DOWN ‘Automobile Liability Insurance’
Bodily injury liability of an automobile liability insurance policy covers an at-fault driver, so they don’t have out-of-pocket expenses for others’ emergency and ongoing medical expenses, loss of income and funeral costs. It also helps cover the policyholder’s legal fees when the accident results in a lawsuit. Property damage liability helps cover costs, such as repairing a home or retail establishment damaged by a vehicle crash and repairing the vehicles of other drivers involved in the accident. Automobile liability insurance has two limits for each of these components; one is per person and one is per accident.

Automobile liability insurance is required by state law, but each state sets its own minimum standards for how much coverage drivers are required to carry. For example, as of 2014 in New York, all drivers must have liability insurance that covers will pay at least $25,000 for injuries to one person, $50,000 for injuries to multiple people, $50,000 for death to one person, $100,000 for death to multiple people and $10,000 for property damage. In any state, drivers can purchase more liability insurance than the state’s required minimums, and it’s often smart to do so since medical bills can be very expensive.

Coverage Beyond Automobile Liability Insurance
For protection against damage to the vehicle itself from causes ranging from accidents to storms, auto owners can also purchase comprehensive insurance and collision insurance. Comprehensive insurance helps pay to replace or repair your vehicle if it’s stolen or damaged in an incident that’s not a collision. Comprehensive typically covers damage from fire, vandalism or falling objects (like a tree or hail). Collision insurance, meanwhile, helps pay to repair or replace your car if it’s damaged in an accident with another vehicle or object, such as a fence or a tree. These two types of insurance are optional for vehicles that are owned free and clear. If the vehicle is financed, the lender may require this additional coverage. The lender wants to protect the vehicle’s full value since it serves as collateral for the loan.
Auto liability insurance is a type of car insurance coverage that’s required by law in most states. If you cause an accident, liability coverage helps pay for the other person’s expenses. There are two types of auto liability coverage that drivers in each state must have: bodily injury liability coverage and property damage liability coverage.

WHAT IS COVERED BY LIABILITY INSURANCE?
Auto liability insurance helps cover:

Bodily injury.
If you’re at fault for an accident that injures another person, bodily injury liability coverage helps pay for their medical expenses.
Property damage.
If you cause an accident that damages someone else’s property (their car, for example), property damage liability coverage helps pay for repairs.
A suburban home.
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LIABILITY INSURANCE COVERAGE LIMITS
The amount your insurer will pay for a covered liability insurance claim is subject to the coverage limits you choose. Each state sets minimum coverage limits for bodily injury liability and property damage liability that drivers must purchase, but you may decide to buy additional coverage. You may see three liability coverage limits on your car insurance policy:

Property damage liability limit.
This is the maximum amount your insurer would pay to repair damage you cause to another party’s property. The maximum payout would not exceed the limit you’ve set.
Bodily injury liability limit per person.
This establishes a maximum payout for each individual who is injured in an accident that you cause.
Bodily injury liability limit per accident.
This sets a cap on the total amount that your insurance provider will pay out for all medical expenses other people incur from a single accident you cause. It’s important to set this limit at an amount that makes you comfortable, as it may be needed to help pay for the medical expenses incurred by multiple people.
Consider the following: You are at fault for a crash that injured three people in another car. Your bodily injury liability limit per person is $50,000 and your bodily injury limit per accident is $100,000. If Person 1’s medical bills total $40,000, Person 2’s cost $30,000 and Person 3’s cost $25,000, you’re likely covered, as each person’s bills were under $50,000 (your bodily injury limit per person), and the total cost of injuries is $95,000, which is lower than your $100,000 bodily injury limit for a single accident.

Any costs that exceed your liability coverage limits are your responsibility — in other words, you’d have to pay them out of your own pocket. That’s why it may be a good idea to increase your auto liability limits above the state’s minimum requirements by purchasing more coverage.

WHAT’S TYPICALLY NOT COVERED BY LIABILITY INSURANCE?
Liability coverage typically doesn’t pay for damage to your own car after an accident — collision coverage helps with that.

Liability coverage also does not extend to costs associated with your own injuries after an accident you cause. If you want this type of coverage, you may want to consider medical payments coverage.

Need help understanding auto liability insurance or your state’s coverage requirements? Talk to a local agent.