Driving without car insurance is illegal in almost every state in the United States, and liability car insurance is the legal minimum. Liability insurance protects you against any damages or injuries you may cause to others while driving your car. We will discuss the significance of liability car insurance, what it covers, and how to determine if you need it in this article.
We will also compare and contrast liability car insurance policies in various states, discuss the advantages and disadvantages of each type, and provide tips for shopping for and avoiding liability claims.
Importance of Liability Car Insurance and Coverage
Liability car insurance protects you from financial loss if you are at fault in an accident. It protects against damage to other vehicles, property, and injuries to third parties, including medical expenses, lost wages, and pain and suffering. You could be personally liable for these expenses if you do not have liability insurance, which could quickly add up to thousands or even millions of dollars.
Liability insurance protects your assets from being seized to pay for damages or court judgments, such as your savings, home, or retirement accounts.
Liability insurance coverage limits are usually expressed as three numbers, such as 25/50/25, which means:
- $25,000 for bodily injury per person
- $50,000 for bodily injury per accident
- $25,000 for property damage per accident
These limits represent the maximum amount your insurance company will pay for each type of coverage. If the damages exceed these limits, you could be personally responsible for the difference. Therefore, choosing the liability insurance coverage that adequately protects you and your assets is important.
Compare and Contrast Liability Car Insurance Policies in Different States
Liability car insurance requirements differ by state, so it's critical to understand the minimum coverage required where you live or plan to drive. In California, for example, drivers are required to carry liability insurance with a minimum coverage of 15/30/5, whereas, in Florida, the minimum coverage is 10/20/10.
Some states also require additional coverage, such as uninsured/underinsured motorist coverage, which covers you if you're hit by a driver who doesn't have insurance or doesn't have enough coverage to pay for your damages.
Aside from minimum coverage requirements, some states have "no-fault" insurance laws, which mean that each driver's insurance company pays for their own medical expenses and lost wages regardless of who caused the accident. Other states use a "fault" system, in which the at-fault driver is responsible for the damages.
Benefits and Drawbacks of Each Type of Liability Car Insurance Policy
Liability car insurance policies are classified into two types: bodily injury liability and property damage liability. Property damage liability covers damage to other people's property, such as their car or mailbox, while bodily injury liability covers medical expenses and lost wages for other people injured in an accident you caused.
Some insurance companies provide combined single limit (CSL) coverage, which combines bodily injury and property damage liability into a single limit.
The advantages of having a higher liability insurance coverage limit are obvious—you'll be better protected if you cause an accident that causes significant damage. Higher coverage limits, however, imply higher premiums. It's critical to strike a balance between the coverage you require and what you can afford.
Different Types of Accidents That Can Cause Liability Claims
Accidents that result in liability claims include rear-ending collisions, T-bone collisions, sideswipe collisions, and head-on collisions. Accidents caused by distracted driving, drunk driving, speeding, or reckless driving can also result in liability claims.
If you cause an accident and someone is injured or their property is damaged, they have the right to sue you.
