When you are driving, you are at risk for causing an accident or being a victim in an accident. No matter how careful you are, accidents are a part of life. And while you can reduce your risk by driving carefully and following all street laws, the fact is that we all have those moments that we miss something. We don’t see the car stopping in front of us in time or an animal moves in front of our vehicle and we swerve to miss it, hitting a neighbor’s fence instead.
In the above examples, you are considered at fault for the accident. This makes you responsible for any damage that your vehicle causes to persons or property. Liability insurance can protect help protect you from lawsuits and damage responsibilities. Be forewarned, however, that minimum liability coverage alone may not be enough coverage to suit your needs.
What is Liability Auto Insurance?
Liability auto insurance is product offered by auto insurance companies that will pay the cost of third party damages, up to the amount of coverage purchased. Liability insurance will not cover your own damages and it will not cover damage to a vehicle if you were not at fault for an accident.
Why Do I Have to Carry Liability Insurance?
Like most types of insurances, liability insurance is actually for your protection. Without it, you could face thousands of dollars of financial loss. You are responsible, by law, to pay for any damages that are considered your fault. Plus, liability insurance is a legal requirement in most states.
An Exception to the Rule
There is one state that does not require liability auto insurance – New Hampshire. Although several bills have been presented to change that, the bill has always been voted against. There seems to be no real reason why the House of Transportation Committee chooses to exclude mandatory liability laws outside of the fact that most New Hampshire drivers already carry auto insurance, despite the lack of state regulation.
Types of Liability Insurance
There are two basic type of liability insurance; property liability and bodily liability. Property liability is mandated in all states and covers only the cost of any damage your vehicle does to property like a third party car or your neighbor’s fence.
If the third party driver is injured, however, you are not protected from the expenses of their medical bills, funeral expenses, lost wages or pain and suffering. For this, you need bodily liability. Bodily liability mandates vary from one state to the next but, even if it is not mandated by your state, it is a good idea to have this type of auto insurance coverage.
What Are Liability Coverage Limits?
Liability limits on auto insurance policies are the maximum amount of money the auto insurance company will pay on damages that are your fault. In most cases, the maximum amount per accident is more than the maximum amount per person. This could put you at risk and to avoid this risk, you should ask your agent to write your policy for the same maximum total and maximum per person.
How Much Does Liability Insurance Cost?
Liability insurance costs will vary from one company to the next. This is why comparison shopping is so important. The cost will also depend on many factors like your driving history, credit report, the type of vehicle you drive, your age, your marital status, the limits you choose on the policy and more. Discounts are offered to help you save money so make sure that you check with your auto insurance agent about any discounts you may be eligible for.
Is Liability Insurance Right for You?
Liability auto insurance isn’t for everyone. Individuals that are financing their vehicles are often required to carry collision to protect the lien holder from extreme loss. If your car is costly but paid for, you may want to consider comprehensive or collision coverage as well. Most people who buy liability insurance only have vehicles that are paid off and have a low market value. The higher premium prices of comprehensive or collision coverage aren’t worth the small amount of money they would receive if their vehicle were considered ‘totaled.’
Types of Coverage You May Want to Add
There are some types of auto insurance coverage that you may want to consider adding to your liability auto insurance. Many of these coverage types are very low in cost but come with some big benefits.
Uninsured and underinsured motorist coverage will pay for the cost of any damages incurred by an uninsured or underinsured motorist. Medical coverage will take care of any funeral expenses or hospital bills if you are injured in an accident. Comprehensive insurance will cover your vehicle in the event of theft, fire, vandalism or natural disaster.
You may also want to consider increasing your maximum coverage amounts. While this may cost you a little more on your monthly premiums, it will protect you from serious accidents and bodily damage expenses. Most accidents cause a lot more damage than the state minimum coverage requirements.
