what is civil liability car insurance?
Liability insurance is a type of insurance that covers the cost of another driver’s injuries and property damage if you are at fault in an accident. Liability auto insurance consists of bodily injury liability insurance and property damage liability insurance.
Bodily injury insurance pays for the victim’s lost wages and medical bills. Property damage insurance covers the costs of repairing your vehicle or stationary objects, such as your house or fence, that may have been damaged in the accident.
Check out wallethub’s analysis of the top 17 insurance companies to find the cheapest liability insurance available in your state.
what does auto liability insurance cover?
Liability insurance covers medical expenses and property damage costs incurred as a result of an accident for which you have been held responsible. your own liability insurance will never cover your own expenses.
Liability insurance also covers legal fees if the policyholder is sued after causing an accident.
Find out what liability insurance covers.
How does auto liability insurance work?
If you are at fault in an accident, the other driver will file a claim with your liability insurance policy for your bodily injury and property expenses. Liability insurance also covers your legal fees if you are sued because of an incident.
The amount the insurance company will pay in the event of an accident is determined by the policy limits. For example, if you choose a bodily injury limit of $25,000, your insurer will only pay medical expenses up to the amount you choose.
Liability insurance policies are often described as a single limit combination policy or a split limit policy.
learn more about how liability auto insurance works
how much does auto liability insurance cost?
Liability insurance costs an average of $716 a year, though the exact cost depends on your state and the amount of coverage you purchase. Your premium will go up as your liability limits increase, but the highest levels of coverage are only marginally more expensive than the state minimum. As a result, it’s generally best to purchase as much liability insurance as you can afford to maximize your protection.
Learn more about how much liability auto insurance costs.
liability insurance coverage requirements
State liability insurance coverage requirements
* new hampshire drivers can waive insurance altogether. **Virginia drivers have the option of paying a $500 annual uninsured motor vehicle fee in lieu of obtaining liability insurance.
Although you should only purchase the minimum amount of coverage for your state, many people also choose to purchase optional insurance.
Learn more about how much liability auto insurance you need.
4 things to consider when buying liability insurance
1. states have different liability requirements
Most states require a certain amount of bodily injury and property damage liability insurance. Some states also require drivers to carry additional types of coverage, such as uninsured motorist, personal injury protection, or medpay.
You need at least the minimum coverage required by your state, and it is recommended that you purchase as much coverage as you can comfortably afford.
2. the more assets you have, the more coverage you will need
The more assets you have, the more auto liability insurance you’ll need. If you own a home or have significant savings, for example, an accident could seriously affect your finances if the other driver decides to sue you.
To illustrate this, if you are at fault in an accident that causes $135,000 in property damage, but your policy only covers $35,000, the other driver can sue you for the remaining $100,000. if the lawsuit is successful, they can use any and all of their assets to collect that payment.
3. you may need additional types of insurance
Liability coverage isn’t the only type of car insurance you should consider. To be fully protected in the event of an accident, you should have collision coverage to protect your vehicle repair costs and personal injury protection insurance to cover your medical expenses.
You should also consider comprehensive insurance, so your car is protected in the event of something besides an accident, like a falling tree or vandalism.
4. there are special state programs for high-risk drivers
Many states have special programs for drivers who can’t get insurance through the private market because they’re considered too high a risk to cover. Since the insurance provided through these programs is very expensive, you should only use this option as a last resort.
video: liability insurance basics
ask the experts
To learn more about liability insurance, Wallethub posed the following questions to a panel of experts. Click on the experts below to see their biographies and responses. 1. Should drivers buy more liability insurance than the law requires? 2. What should drivers consider when determining their liability coverage levels? 3. When should drivers purchase only the minimum liability insurance required by their state?