What does auto liability insurance cover?
Auto liability insurance covers the damage to other vehicles and injuries to other people that result from an accident caused by the insured individual.
There are two kinds of liability coverage:
1. Bodily injury coverage
Bodily injury liability, which covers medical costs, funeral expenses, lost income and pain and suffering of people injured by you.
2. Property damage coverage
Property liability, which reimburses accident victims for the repair or replacement of belongings damaged by you. This covers both someone else’s car or property; for instance, if you hit a sign or house.
Both types of liability insurance cover you only up to your limits, and that is why it’s important to make sure you buy enough coverage for the protection you need. Use our coverage calculator to find a recommended liability coverage level.
Your insurer is obligated to defend you if you are sued following a motor vehicle accident.
Liability insurance does not cover damage to your own vehicle if you are at-fault in an accident, you need collision and comprehensive coverage to pay for those damages. Nor does liability insurance reimburse you for medical expenses if you are at-fault in an accident, your personal health insurance plan may be able to cover unreimbursed medical costs. It also does not cover claims that exceed the limits of your coverage, and it may not extend to legal defense exceeding your policy limits. Higher liability limits can help you to avoid paying out-of-pocket when damages exceed minimum limits, and an umbrella policy can offer limits of $1 million or more once your auto insurance limits are reached.
Liability car insurance coverage limits
States set their own minimum liability coverage requirements for property damage and bodily injuries. Requirements are usually expressed as a group of numbers. For example, California’s requirements are 15/30/5. This means that in California, you must purchase a policy that provides at least:
· $15,000 of bodily injury coverage per person injured in an accident caused by you.
· With a maximum of $30,000 for everyone injured in that accident.
· In addition, you must carry insurance covering at least $5,000 of property damage.
How much does auto liability insurance cost?
Depending upon where you live and what coverage limits you purchase, your annual premium for liability car insurance can vary significantly. Insurance.com acquired Quadrant premium data indicating the average annual liability premium for a driver purchasing minimum coverage limits to be $723.26 in California, versus $890.72 in New York.
You may obtain the cheapest insurance rate if you buy a minimum liability policy. However, minimum coverage levels are not recommended because it can leave you financially exposed in an at-fault accident. Increasing your limits above state minimums should give you better coverage and doesn’t cost much more – averaging approximately $5.00 per month above the cost of minimum coverage.
Penalties for driving without liability insurance
According to the latest Insurance Research Council (IRC), 29.7 million U.S. car owners do not carry legally-required auto insurance. Driving without insurance could save money in the short run, but it can result in serious penalties.
In most states, if you cause an accident, you will be forced to cover the resulting damages. This may drain your savings, and it is possible that a lien could be placed on your home and other assets. Up to 25 percent of your future wages could be garnished.
The Insurance Information Institute (III) reports that in 2014, the average auto liability claim for bodily injury was $16,640 while the average cost for property damage was $3,290. Without insurance, you’d have to cover this out-of-pocket. If you’re taken to court and lose, you could be forced to pay for your victim’s legal fees as well as your own. And you’d still have to repair or replace your own car.
If you don’t cause an accident but are pulled over and caught driving without insurance, you may face:
• Driver’s license suspension
• Registration suspension
• Fines ranging from $600 to $5,000
• Additional lapse fees due to your DMV
• Vehicle impoundment
• Jail time or community service
• Points on your license
• A requirement to carry SR-22 insurance
By driving without insurance, you’re gambling with your future.
Shopping for liability car insurance
It can be smart to review your policy once a year or so and make sure that your assets and income are fully protected. Even if you don’t need to increase or decrease your auto liability insurance, it’s useful to compare auto insurance quotes to make sure that you’re getting a good deal. Make sure the quotes you receive all include the same coverage so that you can make a valid comparison.
When you have a life-changing event during the year – such as adding a teen driver, marriage, divorce, moving, adding or removing a vehicle – it’s particularly important to comparison shop. Your current insurance company may not have the cheapest rates and you could miss out on saving hundreds, or even thousands, of dollars each year by not taking 20 minutes or more to shop around.
