It can be tough to find cheap car insurance but those costs could get even tougher if you don’t know what you need in the form of a reliable policy. We here at Insurance Doctor understand that insuring your car is a necessity and we believe that a well-informed customer can make better decisions in order to save money.
So let’s examine one of the essential types of coverage that every motorist must maintain in order to legally operate a motor vehicle on the road: auto liability insurance.
What is Auto Liability Insurance?
This type of coverage is mandatory for all drivers in the United States because its primary purpose is to cover all expenses related to damage of another driver’s property and any medical costs incurred by another driver in the event of an automobile accident where you are deemed at fault.
With liability coverage, your insurance company will cover all of the costs of the other injured party, less the deductible in your policy and only up to the limits in your coverage. That last part is critical because if your limits are too low, you could be left paying some of these costs out of pocket, which can get pretty expensive.
Auto Liability Coverage
This coverage applies to the costs mentioned but what does that really mean? The two categories of auto liability insurance are property damage and personal injury.
This category applies to any damages that have been incurred by another driver as a result of an accident caused by your actions. The costs that may be paid by your policy included the other driver’s vehicle repair and/or replacement expenses in addition to any other property that was damaged or destroyed in the accident. These are usually surrounding items like fences, buildings, telephone poles, anything that is not owned by you.
This category applies to any medical costs that are incurred by the other driver as a result of an accident caused by your actions. Depending on the situation and the extent of your policy, it may also reimburse the other driver for any lost wages and legal fees should you be sued in court.
What is NOT Covered
Auto liability insurance will not cover any of your costs in either of the above categories. If your vehicle is damaged or totaled or you are injured in a crash that is the result of your actions, these expenses will not be paid for you.
If you would like coverage that will protect you in a situation like this, you need to purchase a comprehensive and/or collision insurance policy.
Most states dictate a mandatory minimum liability limit that must be maintained in a valid insurance policy and these limits may vary from state to state. These limits are in place to ensure that costs are covered in the event of an accident, though the mandated minimums are based on information and data that may not reflect your particular accident or situation.
Knowing your limits is important because they determine just how much your insurance company will pay out to cover the costs incurred by the other driver and if your limits are insufficient to handle those expenses, the onus is on you to pay the rest.
Depending on the severity of the accident that could be hundreds if not thousands of dollars. Liability insurance policies contain three types of coverage limits and the dollar amounts of these payouts are clearly laid out in your policy. Remember, once the insurance company has reached the figure listed, it will not pay out a single dollar more, regardless of whether or not there are additional costs to be paid.
Property Damage Limit
The limit is the maximum amount of money that your insurance company will pay out to repair damage to another person’s property. This could be paid out to the driver of the other vehicle or to the owners of any other property that has been damaged.
Bodily Injury Limit (Person)
The limit is the maximum amount of money that your insurance company will pay out to cover the medical costs for each person who is injured in an accident in which you are deemed at fault.
Bodily Injury Limit (Accident)
The limit is the maximum amount of money that your insurance company will pay out to cover the medical costs for additional individuals involved in an accident in which you are deemed at fault. This means you could be paying for more than one person’s injuries so you should purchase enough coverage to set a limit high enough to take care of multiple injured parties.