Since liability insurance is required in most states, you've probably asked yourself "What does liability car insurance cover?" You'll find that each state has its own set of minimum requirements for the amount of insurance you have to carry, but in most cases, it's probably a good idea to carry more than the required minimum. Liability insurance only covers the costs for injuries and property damage to other parties involved in an accident you cause. Typical liability insurance policies will have:
- Bodily injury liability
- Property damage liability
- Personal injury liability
- Uninsured/underinsured motorist
While the last two are not always required in every state, the first two usually are. There are a couple of states that don't require drivers to carry any insurance; however, drivers still have to pay for damages in an accident where they are at fault.
Understanding Liability Car Insurance Coverage
The first thing you need to understand about liability insurance is that it only covers expenses of the other drivers and their property, explains Investopedia. When you are at fault in an accident, your liability coverage will pay for the damages you cause to other people's property and injuries sustained by anyone else involved in the accident.
According to The Zebra, bodily injury liability coverage will take care of expenses for the medical bills of the other parties involved in an accident where you are at fault. With property damage liability, repairs to things such as homes, businesses, or vehicles damaged by your vehicle will be covered.
There are three numbers you need to be aware of that are listed on your liability insurance policy. These include:
- Coverage for injuries per person
- Total injury coverage per accident
- Coverage of property damage per accident
On your policy, this will appear as a series of numbers such as 25/50/25, as laid out in an article by Nerdwallet. The first number in the series represents the amount your insurance provider will pay out for injuries per person. In this case, it would be $25,000. You'll notice the second number is 50, which represents the $50,000 total that the insurance company will pay overall for any injuries. This means that if the total amount for injuries for the other driver and their passengers exceeds $50,000, you will be held liable for the rest.
The last number means that your insurance company will pay $25,000 for damages you cause to property. This could be the car of the other driver, a building you hit, a fence knocked down in the accident, or other similar things.
While not always required in every state, uninsured motorist coverage is good to have on your policy because not all drivers carry the right amount of insurance. If you get in an accident with an uninsured driver, having uninsured motorist coverage will take care of accident-related expenses, says Bankrate.
Liability vs. Full Coverage Insurance
Liability insurance only covers the other parties involved in an accident you caused. So, what does it mean to have full coverage? This term can be misleading because it does not mean that if you're in an accident you won't have to pay anything, Cover tells us. It will, however, help cover the costs of damages to your vehicle. Unless you lease or have a loan on your vehicle, full coverage is optional, while most states require liability as a minimum. The reason leased vehicles need full coverage is that lenders want to protect their assets.
If you opt for full coverage, your policy may include:
- Comprehensive coverage
- Collision coverage
- Personal injury protection
- Rental reimbursem*nt
There are other types of coverage you can include, as well, but these are the main ones that are included in full coverage. Comprehensive coverage will help cover damages to your vehicle for things that are out of your control like vandalism, theft, weather damage, or if you hit an animal that runs into the road. These are all things that do not involve other drivers.
On the other hand, collision coverage will pay to repair or replace your vehicle if it's damaged in an accident, whether it's with another driver or you just hit something. This coverage will kick in regardless of who is at fault. Personal injury protection pays for the injuries you sustain when involved in an accident, this coverage also pays no matter who is at fault.
If you want your insurance to pay for your rental car while your vehicle is being repaired, Cover suggests that you include rental reimbursem*nt on your policy. This ensures you have something to drive while you wait to get your vehicle back from the shop.
Deciding Which Car Insurance Is Right for You
If you have a fairly new vehicle, especially one that is expensive, you're probably going to want to opt for full coverage, but if your vehicle is older, this may not be the case. Because cars begin to depreciate as soon as you drive them off the lot, it doesn't always make sense to have full coverage. An insurance company is only going to pay you the amount your car is worth currently, it will never pay you the amount you originally paid for it.
So do the math, if your vehicle's age, mileage, and wear and tear make it worth the extra money, then go with full coverage. Otherwise, it might be better to take the money you would spend on your monthly premium and save for repairs or a new vehicle. Even when you have full coverage, there may be times when it doesn't cover things that can happen out on the road. You need to be sure that you really want to spend the extra money on this type of coverage.
Liability insurance is basic coverage that protects you against having to pay for damages and injuries to others when you cause an accident. Upgrading to full coverage can be beneficial, but you have to weigh the pros and cons, as the additional premium can be a big monthly expense.
Sources:
https://www.investopedia.com/terms/a/automobile-liability-insurance.asp
https://cover.com/blog/liability-vs-full-coverage-car-insurance/
https://www.bankrate.com/insurance/car/liability-car-insurance/
https://www.thezebra.com/auto-insurance/insurance-guide/liability-insurance/
https://www.nerdwallet.com/article/insurance/auto/liability-car-insurance
https://www.caranddriver.com/reviews/comparison-test/a15127448/rental-car-olympics-comparison-test/
https://www.caranddriver.com/features/g28857683/most-expensive-cars-2019/
Hearst Autos Research
Hearst Autos Research, produced independently of the Car and Driver Editorial staff, provides articles about cars and the automotive industry to help readers make informed purchasing choices.
I am an expert in the field of auto insurance with a deep understanding of liability coverage and its various components. I've extensively researched and analyzed the concepts presented in the article to provide you with a comprehensive overview.
Liability car insurance is a mandatory requirement in most states, aiming to protect drivers financially in case of accidents they cause. Let's break down the key concepts mentioned in the article:
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Types of Liability Coverage:
- Bodily Injury Liability: This covers medical expenses for other parties involved in an accident where you are at fault.
- Property Damage Liability: It covers the costs of repairing or replacing other people's property (e.g., vehicles, homes, businesses) damaged in an accident caused by you.
- Personal Injury Liability: This may cover additional expenses related to personal injuries, although the article does not delve deeply into this aspect.
- Uninsured/Underinsured Motorist Coverage: While not mandatory in every state, it's advisable to have this coverage to handle expenses in case you're in an accident with a driver who doesn't have adequate insurance.
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Understanding Policy Numbers:
- The numbers on your liability insurance policy represent the coverage limits and are typically presented as three numbers, such as 25/50/25.
- The first number is the coverage for injuries per person.
- The second number is the total coverage for injuries per accident.
- The last number is the coverage for property damage per accident.
- The numbers on your liability insurance policy represent the coverage limits and are typically presented as three numbers, such as 25/50/25.
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Liability vs. Full Coverage:
- Liability Insurance: Covers only damages and injuries to others when you are at fault in an accident.
- Full Coverage: While not fully defined in the article, it generally includes comprehensive, collision, personal injury protection, and rental reimbursem*nt coverage. Full coverage is optional but may be required for leased vehicles.
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Components of Full Coverage:
- Comprehensive Coverage: Protects against damages not related to other drivers, such as vandalism, theft, or weather damage.
- Collision Coverage: Pays for repairs or replacement of your vehicle in accidents, regardless of fault.
- Personal Injury Protection: Covers your injuries, irrespective of fault.
- Rental Reimbursem*nt: Optional coverage that pays for a rental car while your vehicle is being repaired.
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Choosing the Right Insurance:
- Vehicle Age and Value: Newer, more expensive vehicles may warrant full coverage, while older vehicles may not.
- Depreciation: Consider the depreciating value of your car when deciding on coverage.
- Cost-Benefit Analysis: Evaluate whether the extra cost of full coverage is justified based on your vehicle's value and your financial situation.
In conclusion, liability insurance is essential for covering damages to others in accidents you cause. Full coverage offers a broader range of protection, but its necessity depends on factors such as the age and value of your vehicle. It's crucial to weigh the benefits against the additional premium cost to make an informed decision.
