In the US, state governments require a minimum liability auto insurance coverage. If you drive a car, you should know what this means. Liability insurance covers medical and property damage costs for the other person if you’re involved in an accident and are at fault. This is the most basic definition, though there is more to it than what a cursory explanation offers.
To help make sense of this, I’ll be providing an in-depth look at liability insurance and what it covers.
Understanding Liability Insurance
When you’re involved in an accident, you should have adequate auto insurance to cover all eventualities. Collision insurance will cover the cost of repairing or replacing your vehicle. In most cases, you will be required to pay a deductible and your insurer will pay the rest.
If you have comprehensive insurance, this will cover your medical bills and other types of damage that are not the result of an accident, like hail.
Insurance to cover the costs for other vehicles or people will be covered by liability insurance.
What is Covered By Liability Insurance?
This is best explained by an example of what could easily happen to any of us. Whilst driving to work, you change lanes without noticing a car in your blind spot, resulting in a collision. Apart from the damage to your vehicle, the other car is badly damaged, and the driver is injured, requiring medical attention.
Because you are at fault in this accident, you are responsible for all the costs. This means your insurance needs to cover the cost of repairing or replacing the other car involved in the accident. You will also have to pay for their medical expenses. If they are unable to work and suffer a financial loss as a result, you may also be liable to pay for loss of income. There may be legal costs involved if you are sued for damages.
The question is: will you be covered for all these costs?
Minimum liability insurance will cover medical and damage costs for another car or stationary objects that may be damaged, like a fence or lamp post. Not all liability insurance policies cover loss of income or legal costs.
For complete peace of mind, you should check if your auto insurance provides full liability coverage. In other words, you will be covered for medical expenses, damage to property, legal fees, and loss of income or disability claims made against you.
How Much Liability Insurance Cover Do You Need?
Everyone driving a car in the US is required to have liability insurance. The minimum amount of insurance that you need will differ depending on state laws. Apart from the legal requirements, liability insurance gives you great peace of mind. Medical expenses can be prohibitive for the average American.
Just like you need to have adequate personal medical insurance, you should also have good liability insurance cover to protect you if you are responsible for someone else’s medical bills, should you be at fault in an accident.
Often, the minimum liability insurance requirements may not be enough to cover you in a worst-case scenario. If you are uncertain about how good your liability insurance is, speak to an insurance expert who can advise you on what would be the best liability insurance coverage for your situation.