Liability Car Insurance

Liability car insurance is a type of insurance that covers the damages to another person which is a result of an accident that is caused by you. Liability insurance coverage is one of the most basic forms of auto insurance and is also one of the few types of liability coverage that is mandatory in every state in the USA. The minimum liability coverage limits, however, vary, according to you where you live. If the liability car insurance is included in your car insurance and you were at fault for the accident that happened, then the carrier will pay for the claims of the other drivers for any damage that you may have caused.

Minimum liability car insurance requirements by state

Source: pciaa.net, www.iii.org.

What does liability car insurance cover?

There are two different types of liability car insurance that you can get. Each type of insurance covers different things. It may be Bodily Injury Liability (BI) or Property Damage Liability (PD).

The Bodily injury liability (BI) policy pays for death or injuries that maybe be caused by a motor vehicle accident, up to the limit of your policy that you, (the policyholder) or other drivers covered by your car are found responsible for. The terms of the policy usually vary but most of the times the bodily injury liability will pay up to the limits for:

• Loss of income
• Medical expenses
• Funeral expenses
• Pain and suffering
• Lost wages
• Legal defense if a lawsuit is filed and you are sued

The Bodily injury liability does not cover your own personal injuries and only covers the injuries which are suffered by other that you are liable for. The limits of the policy are usually written as $75,000/$150,000 that means that the maximum that the firm will pay out for a single person affected by you, is $75,000 and the maximum payout by all persons who are injured or affected by the one accident is $150,000. The coverage amounts may obviously vary depending on different factors, but this may also be written like 75/150. Like already mentioned, the policyholder is not covered himself by this policy for injuries and for their personal injuries to be covered you can take medical payments coverage or personal injury protection (PIP).

Property Damage Liability (PD) will pay up to the limit of the policy for the damages done to somebody else's property for which the policyholder or any other drivers who are covered by your car insurance policy are held responsible for after a car accident. Usually this Property damage liability (PD) is for any damage done to another vehicle but this may also cover damages that may be caused by you to other person's property, like somebody's house, tree, pole, fence, etc.

This coverage, Property damage liability will protect the policyholder against any lawsuits which may be filed by the affected parties’ against the damage to their properties as a result of the car accident caused by you. It will not cover any damages which may be caused to your (policy holder's) car. For your own car protection coverage, you would require comprehensive coverage or collision coverage.

Is liability car insurance mandatory?

As a car owner, it is mandatory for you to carry this coverage of bodily injury liability and property damage liability insurance as part of the minimum auto insurance coverage, in most of the states in the USA. Most states have their own policies regarding car insurance requirements. You do have the option of increasing or raising the level of your liability limits which is highly encouraged in most cases.

Most car insurance companies require you to carry the same amount of liability coverage on all your cars that are listed in your policy. It is the same case in many states as well, that you need to have the same level of liability coverage on all the vehicles which are in your name. Sometimes the state may not require this but the insurance company will.

There are a few states however where they do not require the bodily injury liability coverage at all since they have what is known as the "no-fault laws". According to this, all drivers must have what is known as "personal injury protection" which pays if they get injured themselves or if the passengers with them get injured. If the limits you have are exceeded then you will end up paying from your own pocket for whatever injuries you might have caused.

Recommended limits for liability car insurance

In most of the states, the bare minimum limit of liability car insurance is so less that it is only enough to drive legally there. It is not enough to pay for serious injuries or to replace a new car.

Insurance industry experts and The Insurance Information Institute (III) recommend that all motorists should carry at least $100,000 per person and also $300,000 per accident (which is referred to as 100/300 coverage) for bodily injury liability coverage. $50,000 or $100,000 is recommended for property damage liability coverage. It is highly recommended to get higher coverage and limits if you can afford as it will protect your assets.

What happens if I don't have liability car insurance?

Most states require you to carry this liability car insurance and if you do not have it and the state requires it, then you are in trouble and you might get penalties in the form of suspension of your license or vehicle registration or fines.

If you do not have this property damage liability and bodily injury liability coverage on your car insurance policy, in that case, you would be personally held responsible for any injuries or damages that may be caused by you in a car accident. In this case, you might end up losing your assets and be forced to liquidate savings, property, and other assets to pay the fines or lawsuits against you.

Again, if you do have the coverage of bodily injury liability but if the limits are low, then you are still taking a big risk because if you cause a serious accident where the expenses resulting from the injuries caused by you exceed the limits that you are covered for, then you will end up paying from your own pocket.

The same thing applies to the other policy, property damage liability insurance. It is required by all states for you to carry this policy but again, if you have low limits then you would be personally responsible for the amount that is over and above what your insurance company is paying for.

Can you use your liability car insurance on your own car?

You cannot use your own liability car insurance on your own personal vehicle, even if your car is completely destroyed in the accident. You also cannot make a claim for your property if it is damaged under the property damage liability.

Even if your partner runs over your car with his vehicle, you cannot make a claim against the liability coverage that you have on his vehicle. Car insurance policies are generally written in such a way that the liability coverage will protect the members of your family against the claims that may be brought about by other people who are not part of your household. If all you have is liability insurance, then your car is not covered. If you get in an accident but you are not at fault, in that case, you can use the other party, which is at fault through property damage liability in order to claim for your car's damages.

You would require the collision and comprehensive coverage if you are at fault and you are involved in a car accident in order to cover for your car. Collision Coverage pays for accidents with other vehicles or objects to pay for your damages. It covers damage to your car from floods, fire, vandalism, hail, theft, or animal strikes.

Determining a liability claim from a collision claim

Both of these liabilities, property damage liability as well as collision insurance pay for the damages to cars in a car accident but the way they are claimed is different. The liability coverage, property damage, as well as bodily injury, will protect you against somebody filing a claim against you for an accident that you may have caused. The collision covers your vehicle against the damages it may have had when it hit, or got hit by another car or maybe an object, no matter who was at fault.

So once you are covered, you can file a claim against your collision coverage for the damages that your car sustained and the other driver in the car would file a claim against you for the damages his car sustained and this would be covered by the liability insurance.

This way, you have covered both ways and it is a win-win situation. It is always good to be covered both ways and always good to maintain a higher level of limits to be safe.