Chances are, your state requires you to carry liability coverage on your auto insurance policy. This is one of the, if not the, most important coverages on your policy. Liability coverage pays for any property damage or bodily injury the driver of your car causes. It also covers any legal or court costs accrued in case you're sued because of a car accident. The coverage follows the vehicle, no matter who's driving. Even though it's a mandated coverage, you still have options related to your personal auto insurance policy.
Bodily Injury Liability
When you're looking at car insurance quotes or the policy itself, you'll usually see a set of three numbers separated by slashes. These indicate the monetary coverage, in thousands of dollars, featured in the policy. The first number relates to bodily injury liability. Unfortunately, this number doesn't cover you directly. Rather, bodily injury protects you from claims. So, in the unlucky event that you cause an accident, this coverage protects you in case others are injured. It covers medical expenses, lost wages and lawsuits related to pain and suffering.
The second number in the set refers to the total coverage for bodily injury. This is the maximum pay out for all people injured in an accident.
Property Damage Liability
The third number in the set relates to property damage coverage. Similar to bodily injury liability, property damage liability doesn't cover your car or property. Rather, this coverage pays for any damage your car causes to another vehicle or other property, such as a building or a fence. Again, this coverage only takes effect if the driver of your vehicle is deemed responsible for the accident.
Choosing Coverage
All states except New Hampshire have minimum requirements for liability coverage. Many motorists choose the minimal requirements because it drops their premium. However, this may not be the best course of action in the long run. If the coverage isn't sufficient to pay for injuries or property damages in case the driver of your vehicle is at fault, the other driver may come after your monetary assets via a lawsuit. For that reason, Edmunds recommends opting for 100/300 limits, or $100,000 for personal injury ad $300,000 total.
That said, the amount of liability coverage you choose depends largely on your personal financial situation. If your income is on the lower end, and you rent your home, the minimum requirements might suffice. Conversely, if you're a high wage earner with a lot of assets, you may want to opt for the maximum coverage available to protect yourself.
Take a critical look at your finances, and select the liability coverage that best protects your assets while staying in your budget. For more information, contact an insurance company like Ahlquist Insurance.
Share25 May 2016
When I got married, I knew that there were a few things that I needed to learn about the way the world worked. For starters, I had to figure out how insurance worked since I wanted to make the most of my life without worrying about money. I started focusing on the policies that I had in place and gradually moved towards acquiring new life insurance and the like. Having each of these coverages helped give both me and my spouse peace of mind. We both knew if something happened to me that the other would be okay. Check out this blog to learn more about insurance needs.