By Donna LeValley
From Kiplinger’s Personal Finance
Question: What is auto liability insurance?
Answer: Basically, liability coverage is the part of your auto insurance policy that pays for the other driver’s expenses if you cause a car accident. It does not, however, cover your own. There are two types of liability coverage: bodily injury and property damage. In some states, a third type of liability coverage called uninsured/underinsured motorist coverage is also required.
Don’t forget that your property damage liability insurance won’t cover the cost of repairing your car if you’re in an accident. Also, your bodily injury liability insurance doesn’t cover your own medical bills if you’re injured in a collision. Instead, it covers the injuries or damage that you cause to another person in an accident. Liability coverage protects your financial well-being, not your body or your property.
Question: What is covered by bodily injury liability insurance?
Answer: Bodily injury liability coverage helps pay the costs for anyone that is injured in a car accident where you’re found liable. This may include a driver or passengers in another car, pedestrians or unrelated passengers in your own car. It covers medical expenses, compensation for lost wages and income and legal fees.
For instance, you run a red light, strike another car, and injure the driver. Your liability coverage obliges the company to defend you—in court, if necessary—and pay claims to the other driver for vehicle damage and bodily injuries, including medical and hospital costs, rehabilitation, nursing care, and possibly lost income and money for pain and suffering.
Question: What is covered by property damage liability insurance?
Answer: Property damage liability coverage helps pay for damage you cause to another person’s vehicle or property. If you hit someone else’s car, front porch, or mailbox with your car, property damage liability coverage may help pay to repair their property.
Fewer states require uninsured/underinsured motorist insurance but it’s in your and your passengers’ best interests to think seriously about buying this coverage. Unlike liability insurance, this coverage can help pay your expenses.
It covers your injuries, your passengers’ injuries, and damage to your vehicle if you’re hit by a driver who doesn’t have enough or has no auto insurance coverage. It may also cover hit-and-run accidents. So, if a driver hits your vehicle and flees, you can file a claim against your policy’s uninsured motorist coverage.
Question: What are minimum car insurance requirements state-to-state?
Answer: Minimum car insurance requirements vary from state to state. But state requirements are generally modest—typically $20,000–30,000 for bodily injury suffered by one person in an accident, $50,000 for all people hurt in the same accident, and up to $25,000 for property damage resulting from that accident. A state’s required minimum merely keeps you in compliance with state law. Most drivers need more than the minimum to avoid paying out of pocket to make up the difference between the damages and your coverage.
©2024 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.
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