What Is Liability Coverage In An Auto Insurance Policy?

By Author: Jerry Pickett
Total Articles: 4762
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Liability is one of the primary kinds of coverage offered in most auto insurance policies. A thorough understanding of liability can help you best evaluate which coverage plan meets your specific needs. In the simplest terms, liability coverage amounts to how much money your policy will pay out to cover losses for which you are legally responsible. This includes the price of injuries and damages suffered by a third party for which you are responsible.

But that's just the basics; in order to get the most out of your policy, you'll want to review various types of common liability coverage.

Bodily Injury Liability Coverage: Most states legally require a minimum amount of bodily injury coverage in auto insurance policies. This covers any costs associated with injuries that you cause to others. While most plans automatically include a minimum amount of bodily injury liability coverage, it is advisable to upgrade to a higher limit as bodily injury liability can easily result in extensive costs.

Property Damage Liability Coverage: If you are responsible for an automobile accident that results in damage to a third ...
... party's property, property damage coverage pays out to cover the costs. In most auto accidents, the property in question will be the other driver's vehicle. However, property damage liability coverage extends to any damaged property and can include things such as mailboxes, streetlights, and sign poles.

Collision Liability Coverage: Collision liability, like property damage liability, pays for the third party's car but also pays for damages to your car as well. With most collision plans, if your vehicle is damaged to a point where it can no longer function, the policy will pay you the value of your car. Although it might carry slightly higher premiums, it is a risk well worth taking due to the amount of money it could wind up helping you save.

Comprehensive Liability Coverage: This is an additional kind of coverage to be used in conjunction with other plans that cover the results of an automobile accident. Comprehensive liability coverage offers protection against other misfortunes that can befall an automobile, such as fire, theft, floods, and vandalism.

Uninsured Motorist Liability Coverage: These plans offer you protection if you are involved in an accident caused by an uninsured motorist. In addition, it pays out off the damages if you are the victim of a hit-and-run accident.

Assessing Your Risks
When it comes to liability coverage, you can determine your risks by comparing the cost of the policy against the amount of money you think you would realistically be able to pay out of your own pocket in the event that you're responsible for an accident.

Making Sure You're Covered
Because there is no way to accurately predict the probability or severity of an auto accident, it is almost always a good idea to pay a little more for coverage that exceeds the legally required minimum. When it comes to high liability coverage, it's better to have it and not need it than need it and not have it.

Saving Money on Liability Coverage
Although liability coverage is required part of your auto insurance policy, there are ways to save money when selecting your insurance plan. "Split limit policies" separate the amount of insurance paid to each person involved in an accident. For example, a split limit policy of 30/60/10 means that $30,000 is the maximum payout to people who were injured in the accident. The middle number, 60, refers to a $60,000 maximum payout for the accident in total. Finally, the third number, 10, refers to a $10,000 maximum payout for property damage. Split limits offer you a way to get the most out of your coverage without taking unnecessary risks by going with the state-required minimum.
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