What is liability car insurance? Liability is the bread and butter of auto insurance. This is the car insurance coverage that pays for the damages caused to others in a car accident for which you were at fault.
However, do you know how the two types of liability auto insurance work and what limits you need? We at Carsurance are here to help you.
First and foremost, after learning what many people wonder: “what is liability car insurance?” you will find out about the types of liability auto insurance.
Also, we will provide recommendations on how much coverage you should consider and detail the other primary types of insurance coverage.
Read on to learn everything you need to know about liability insurance and how this insurance relates to other coverages, like collision and comprehensive.
What Is Covered by Liability Auto Insurance?
In general, liability insurance pays for the bodily injury and property damage you’ve inflicted on others. In order to trigger the liability payment, it’s crucial that you were at fault in the accident.
All in all, there are three separate limits (the maximum amount an insurance company will pay) for liability insurance:
- Bodily Injury Liability per Person Limit: This liability car insurance coverage pays the medical payments, pain and suffering, lost wages, and similar expenses of the injured party.
These costs can pile up fast since they can include expenditures like hiring dog walkers for someone too injured to accomplish the task.
- Bodily Injury Liability per Accident Limit: This is the maximum an insurer will pay for medical expenses in a single accident under liability car insurance coverage. Let’s take a situation where the limit per person is $50,000, and the limit per accident is $100,000.
If three persons were injured, with medical expenses of $25,000, $40,000, and $45,000, an insurance company, like, for example, GEICO, which offers liability insurance coverage, would not pay $110,000, but only $100,000, which is the maximum payout for a single accident.
- Property Damage Liability Limit: This coverage pays for the damage you’ve caused to other people’s property. Most often, it’s their car, but it may include personal belongings like a tablet, laptop, watch, or even stationary property like a mailbox or fence.
How Does Car Liability Coverage Work in the No-Fault States?
Every driver pays their own medical expenses in no-fault states, regardless of their fault. This means that there’s no bodily injury liability limit in such states.
Instead, there’s personal injury protection (PIP) coverage, including medical expenses, lost wages, and any similar expenses you and your passengers may have.
PIP insurance is mandatory in 12 states: Florida, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Puerto Rico, and Utah, as well as the District of Columbia.
Sometimes, your health insurance can replace your PIP. However, it doesn’t reimburse lost wages, nor does it cover other drivers. Furthermore, many health insurance plans exclude vehicle-related payouts.
Understanding Liability Car Insurance Limits
Insurance companies usually package property damage and bodily injury limits together. This means that the offer will typically look like $25,000/$50,000/$10,000.
In other words, you’re getting $25,000 per person, $50,000 per accident for bodily injury, and $10,000 for property damage. A combination with higher limits would look like $100,000/$300,000/$50,000.
You can also see this on the companies’ websites. For instance, if you are looking for the Allstate liability coverage amount, you will also find this data available on the company’s website.
Many people wonder how much protection they actually need. Should you choose cheap liability coverage or opt for peace of mind with a more expensive package?
You certainly can’t go below your home state’s minimum. Some states, such as Florida, have really low limits, like $10,000/$10,000 for property damage liability and personal injury protection.
Other states, like Texas and Arizona, require higher limits.
For instance, in Texas, you have to have a minimum of $30,000 in liability coverage for every injured person, up to $60,000 per accident, and $25,000 for property damage per accident. Namely, the basic liability car insurance in Texas is referred to as 30/60/25.
However, we wouldn’t advise any customer who can afford something better to choose the state minimum. A combination of $50,000/$100,000 for bodily injury and $50,000 for property damage is the lowest coverage that would still give us a piece of mind.
We know how high medical expenses can be, and the average price of new cars is higher than ever. Also, people are seeking costly features, leading the car industry in a modern era.
This implies you easily risk causing property damage near $50,000 in an accident. And it’s easy to exceed that amount, meaning doubling your minimum limits is a smart thing to do.
How Much Is Liability Car Insurance Quote and What Doesn’t It Cover?
Overall, liability-only policies are significantly cheaper than what we would consider full coverage. Even with higher limits, like $50,000/$100,000 for bodily injury and $50,000 for property damage, the prices are pretty affordable.
On average, a customer will have to pay somewhere around 2–3 times more for full coverage, as data on liability car insurance vs. full coverage shows. That said, make sure you learn about liability-only car insurance for various age categories in different locations in the United States.
Additionally, basic liability insurance doesn’t cover any passengers in your vehicle. However, MedPay and third-party liability provide protection in these instances.
Liability doesn’t cover your expenses related to any damaged property and injuries from an accident. In fact, the GEICO liability car insurance coverage page confirms this.
For that, you will need MedPay/PIP and collision coverages. These two are car coverages that pay regardless of who is at fault in a crash.
Furthermore, liability doesn’t cover any damages to your car when it isn’t being driven, like theft, a tree falling on it, flooding, etc. Comprehensive coverage is the protection plan for that.
Liability Auto Insurance: Third Party Definition
Per definition, this coverage pays the damages and injuries you are legally liable for. It’s called a “third party” because the beneficiary isn’t the insured party or the insurance company but the party that suffered the damage.
When we analyzed all the legal mumbo jumbo, it looks like third-party liability includes protection for injuries to your passengers.
It’s worth noting that almost no insurance company differentiates regular liability and third-party liability on their website. They may only offer regular liability plus MepPay or PIP to cover your passengers’ medical bills.
What Is Liability Car Insurance? — Final Thoughts
Liability car insurance is mandatory in almost all states in the US. Even though many companies offer a cheap liability car insurance option that satisfies the state minimum, we would advise a potential customer to purchase higher limits.
In addition, we would suggest opting for what’s commonly considered full coverage. This would include underinsured/uninsured motorists, comprehensive and collision insurance, plus some kind of medical coverage, like MedPay or PIP.
In addition, as with all other insurance coverages, the prices vary significantly based on several factors, like the insurance company, your state, and your profile.
That’s why it’s wise to explore the market, and our auto insurance reviews will help you decide which companies are the best for you.
People Also Ask
Does my liability insurance cover my car if someone hits me?
No, it doesn’t. As a matter of fact, your liability insurance covers only the damages and injuries you have caused to others.
Be that as it may, if someone hits you, you can expect payment from their insurance if their limits are adequate. In addition, adding collision coverage is a wise thing to do to best protect your vehicle.
When should I drop full coverage on my car?
Unless broader coverage is a significant financial burden, you are better off keeping it. All in all, it provides stronger protection than just liability insurance.
For instance, you can rest assured you will be covered if your car gets stolen or if it gets damaged in an accident. In addition, another benefit is that your insurance will cover medical expenses.
What is covered by liability car insurance?
Liability car insurance covers the expenses of the damage and injuries you have caused to third parties and their property. More specifically, the two components of this insurance are property damage and bodily injury.
Your liability insurance doesn’t include your own vehicle or your medical bills. However, if the other driver was at fault, you can expect payment from their insurance.
What are the six types of car insurance?
Uninsured/Underinsured Motorist Coverage — This protection plan compensates for the damage inflicted by a driver with insufficient or no insurance.
For example, if your $55,000 car is totaled, and their liability limit is $50,000, your insurance company will pay you the remaining $5,000.
Comprehensive — This type of insurance is there to repay any damage to your vehicle while it wasn’t in use. It covers vandalism, natural disaster, fire, theft, falling objects, etc.
Automobile liability coverage — This coverage pays for the bodily injuries and property damage you’ve inflicted on others in an at-fault accident.
Collision — This coverage helps you pay for repairs or replace your vehicle after a covered accident. It always carries a deductible, and it’s a natural extension of your liability coverage.
Some companies will even reimburse the expenses of a rental car while your vehicle is being repaired.
Personal Injury Protection — This coverage pays for lost wages and the treatment of any injuries to you and your passengers. It’s mandatory in no-fault states.
Medical Payments — This coverage is similar to personal injury protection, but it only pays for medical expenses without reimbursing any lost salaries. Furthermore, it isn’t tied to the no-fault system.
Should I get rental car liability insurance?
If you already have auto insurance, it will transfer to a vehicle you are renting. If you don’t have substantial liability insurance, think about buying the rental company’s offering.
That is to say; many rental car insurance companies offer auto insurance bundled into their offer.
Generally speaking, rental car liability insurance protects you from lawsuits in case of a crash. Namely, it’s good to have it if you cause a crash and someone sues you for their medical bills.
Is liability the same as full coverage?
No, it isn’t. Liability insurance will only pay for the damages you’ve inflicted on others (destroyed property and bodily injuries, typically). This means you won’t find extensive protection with liability car insurance. That’s the answer to: “what is liability car insurance”?
As far as full coverage is concerned, there’s no universal definition of it. Nonetheless, for the majority, it would include comprehensive, collision, and medical coverages.
These will cover your expenses if an accident happens, even if it was your fault. They will also protect your vehicle from theft, natural disasters, and similar misfortunes.