What Is Liability Insurance?

What Is Liability Insurance?
Financial Insurance
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By: Kristopher Speegle, Allstate Insurance

Auto liability insurance is a type of car insurance coverage that's required by law in most states. If you cause an accident, liability coverage helps pay for the other person's expenses. There are two types of auto liability coverage that drivers in each state must have: bodily injury liability coverage and property damage liability coverage.

WHAT IS COVERED BY LIABILITY INSURANCE?

Auto liability insurance helps cover:

  • Bodily injury. If you're at fault for an accident that injures another person, bodily injury liability coverage helps pay for their medical expenses.
  • Property damage. If you cause an accident that damages someone else's property (their car, for example), property damage liability coverage helps pay for repairs.

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LIABILITY INSURANCE COVERAGE LIMITS

The amount your insurer will pay for a covered liability insurance claim is subject to the coverage limits you choose. Each state sets minimum coverage limits for bodily injury liability and property damage liability that drivers must purchase, but you may decide to buy additional coverage. You may see three liability coverage limits on your car insurance policy:

  • Property damage liability limit. This is the maximum amount your insurer would pay to repair the damage you cause to another party's property. The maximum payout would not exceed the limit you've set.
  • Bodily injury liability limit per person. This establishes a maximum payout for each individual who is injured in an accident that you cause.
  • Bodily injury liability limit per accident. This sets a cap on the total amount that your insurance provider will pay out for all medical expenses other people incur from a single accident you cause. It's important to set this limit at an amount that makes you comfortable, as it may be needed to help pay for the medical expenses incurred by multiple people.

Consider the following: You are at fault for a crash that injured three people in another car. Your bodily injury liability limit per person is $50,000 and your bodily injury limit per accident is $100,000. If Person 1's medical bills total $40,000, Person 2's cost $30,000 and Person 3's cost $25,000, you're likely covered, as each person's bills were under $50,000 (your bodily injury limit per person), and the total cost of injuries is $95,000, which is lower than your $100,000 bodily injury limit for a single accident.

Any costs that exceed your liability coverage limits are your responsibility — in other words, you'd have to pay them out of your own pocket. That's why it may be a good idea to increase your auto liability limits above the state's minimum requirements by purchasing more coverage.

WHAT'S TYPICALLY NOT COVERED BY LIABILITY INSURANCE?

Liability coverage typically doesn't pay for damage to your own car after an accident — collision coverage helps with that.

Liability coverage also does not extend to costs associated with your own injuries after an accident you cause. If you want this type of coverage, you may want to consider medical payments coverage.

Need help understanding auto liability insurance or your state's coverage requirements? Give me a call today at 808.969.7767 or visit: http://hawaiiallstate.com/

 

ABOUT KRIS SPEEGLE:

Aloha, As an Allstate agent living in Hawaii for most my whole life, I know many local families. My knowledge and understanding of the people in this community help me provide the customer with an outstanding level of service. I love being an active member of our community with involvement in the Rotary of Hilo Bay (Board Member), Hawaii Island Chamber of Commerce, and Big Island Referral Network. I look forward to helping families like yours protect the things that are important – your family, home, car, retirement, and more.