The Benefits of Liability Car Insurance

If you own a car, you need car insurance. Not only is it required by law in most states, but it also protects you from financial losses if you cause an accident that injures someone or damages their property. Liability car insurance is the most basic and essential type of coverage that you should have. In this article, we will explain what liability car insurance is, what it covers, how much you need, how much it costs, and what benefits it offers.

What does liability car insurance cover?

Liability car insurance covers two types of damages that you may cause to others in a car accident: bodily injury and property damage.

• Bodily injury liability pays for the medical expenses, lost wages, pain and suffering, and funeral costs of the people you injure in a car accident. It also covers your legal fees if you are sued by the injured parties.
• Property damage liability pays for the repair or replacement of the vehicles or other property that you damage in a car accident. It also covers your legal fees if you are sued by the property owners.

Liability car insurance does not cover your own injuries or damages to your own vehicle. You will need other types of coverage, such as collision, comprehensive, medical payments, or personal injury protection, to cover those costs.

How much liability car insurance do you need?

The amount of liability car insurance that you need depends on your state’s laws and your personal situation. Every state except New Hampshire requires drivers to have a minimum level of liability coverage. However, these minimums are usually not enough to cover the full costs of a serious accident. If you are found at fault for an accident that exceeds your liability limits, you will have to pay the difference out of your own pocket. This could put your assets and future income at risk.

Therefore, it is recommended that you buy more than the state minimums of liability coverage. A common rule of thumb is to have at least $100,000 per person and $300,000 per accident for bodily injury liability, and $50,000 per accident for property damage liability. You may also want to consider buying an umbrella policy, which provides additional liability coverage beyond your car insurance limits.

How much does liability car insurance cost?

The cost of liability car insurance varies depending on several factors, such as your age, driving record, credit score, vehicle type, location, and the amount of coverage that you choose. According to Forbes Advisor1, the average annual cost of liability car insurance in the U.S. was $611 in 2020.

To get the best price for your liability car insurance, you should shop around and compare quotes from different insurers. You should also take advantage of discounts that may be available to you, such as bundling your home and auto policies, paying your premium in full, having a good driving record, taking a defensive driving course, or installing safety features in your vehicle.

Car Insurance

One of the main benefits of having adequate liability car insurance is that it gives you peace of mind when you drive. You don’t have to worry about being sued or going bankrupt if you cause an accident that injures someone or damages their property. Liability car insurance also helps you comply with the law and avoid penalties such as fines, license suspension, or jail time.

Another benefit of having adequate liability car insurance is that it can help you save money on other types of coverage. For example, if you have a high deductible on your collision or comprehensive coverage, you can use your liability coverage to pay for the damages to the other party’s vehicle or property, and avoid paying out of your own pocket.

FAQs about liability car insurance

Here are some of the most frequently asked questions about liability car insurance and their answers:

• Q: What is the difference between split limits and combined single limit?

• A: Split limits are the most common way of expressing liability car insurance limits. They show the maximum amount of coverage for bodily injury per person, bodily injury per accident, and property damage per accident. For example, 100/300/50 means $100,000 for bodily injury per person, $300,000 for bodily injury per accident, and $50,000 for property damage per accident. Combined single limit (CSL) is another way of expressing liability car insurance limits. It shows the maximum amount of coverage for both bodily injury and property damage in any one accident. For example, 300 CSL means $300,000 for both bodily injury and property damage in any one accident.

• Q: What is the difference between liability car insurance and full coverage car insurance?

• A: Liability car insurance is the minimum level of coverage that you need to drive legally in most states. It only covers the damages that you cause to others in a car accident. Full coverage car insurance is a term that usually refers to having both liability car insurance and collision and comprehensive coverage. Collision and comprehensive coverage pay for the damages to your own vehicle in a car accident or other events, such as theft, fire, vandalism, or natural disasters.

• Q: What happens if I don’t have enough liability car insurance?

• A: If you don’t have enough liability car insurance to cover the costs of an accident that you cause, you will be responsible for paying the difference out of your own pocket. This could mean selling your assets, garnishing your wages, or filing for bankruptcy. You could also face legal consequences, such as being sued by the injured parties or their insurance companies, or having your license suspended or revoked by the state.

• Q: What happens if I have too much liability car insurance?

• A: If you have too much liability car insurance, you may be paying more than you need to for your coverage. However, having too much liability car insurance is not necessarily a bad thing, as it provides you with extra protection in case of a catastrophic accident. You should review your liability car insurance limits periodically and adjust them according to your financial situation and risk tolerance.

• Q: How does liability car insurance work in no-fault states?

• A: In no-fault states, drivers involved in a car accident must first file a claim with their own insurance companies regardless of who was at fault. In those states, drivers are typically required to purchase personal injury protection (PIP) coverage, which covers their own medical expenses and those of their passengers. However, liability car insurance is still required in no-fault states to cover the damages that you cause to others beyond the PIP limits or thresholds. For example, if you cause an accident that results in serious injuries or death, or significant property damage, you may still be liable for those costs.

• Q: How does liability car insurance work with rental cars?

• A: If you have liability car insurance on your personal vehicle, it may extend to rental cars that you drive within the U.S. However, you should check with your insurer before renting a car to confirm your coverage and limits. You may also want to consider buying additional coverage from the rental company or your credit card company to avoid paying for any damages that exceed your liability limits.

Conclusion

Liability car insurance is an essential part of any car insurance policy. It covers the damages that you cause to others in a car accident and protects you from financial and legal consequences. Having adequate liability car insurance can give you peace of mind when you drive and save you money on other types of coverage. To get the best deal on your liability car insurance, you should shop around and compare quotes from different insurers and take advantage of discounts that may be available to you.

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