What Is Liability Car Insurance?

Car insurance is a necessity for every driver on the road today. While there are a variety of different types of car insurance policies available, liability car insurance is one of the most important.

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Liability car insurance is intended to cover the cost of damage or injuries that you may cause to other drivers, their passengers or their property in the event of a car accident for which you are found to be at fault.

Do You Need Liability Car Insurance?

Liability car insurance is required by law in most states, and the minimum amount of coverage required may vary depending on where you live. In general, liability car insurance policies are divided into two main categories: bodily injury liability coverage and property damage liability coverage.

Bodily Injury Liability Coverage

Bodily injury liability coverage is designed to cover the medical expenses, lost wages and other consequences incurred by other drivers or their passengers if you are found to be at fault for a car accident. It does not include injuries you, the driver, sustain as a result of the accident. (Your health insurance should cover these medical costs.) Your bodily injury policy may also include coverage for legal expenses if you are sued as a result of the accident, as well as loss of income, pain and suffering, and funeral costs of the injured parties.

The amount of bodily injury liability coverage you need will depend on a variety of factors, including the state you live in and the assets you have that may be at risk in the event of a lawsuit.

Property Damage Liability Coverage

Property damage liability coverage is designed to cover the cost of repairing or replacing other drivers' vehicles or property that you may damage in an accident. This may include damage to another driver's car, as well as damage to other types of property, such as fences or buildings. Like bodily injury liability coverage, it does not cover damage to your car. You’ll need collision coverage for that.

How much property damage liability coverage you need — after meeting the requirements of state law — depends on what you’re comfortable with. You want enough coverage to protect your assets in the event of a serious accident.

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How Much Does Liability Car Insurance Cost?

The cost of liability car insurance can vary widely depending on a number of different factors, including the type of car you drive, your driving record and the amount of coverage you need. On average, however, liability car insurance is less expensive than other types of car insurance policies. According to a recent report by the National Association of Insurance Commissioners, the average cost of liability car insurance in the United States in 2020 was approximately $631 per year.

While the cost of liability car insurance may be lower than other types of car insurance policies, it's important to note that the amount of coverage you get can vary depending on the policy you choose. The minimum amount of liability car insurance required by law may not provide adequate coverage in the event of a serious accident, so it's important to carefully consider your coverage needs and choose a policy that provides sufficient protection. Remember: You’ll have to pay the difference out of pocket.

Liability Insurance Coverage Limits

In general, liability car insurance policies are sold with a variety of different coverage limits, generally separated into three categories: property damage liability limit, bodily injury liability limit per person and bodily injury liability limit per accident. Coverage limits refer to the maximum amount that the insurance company will pay out in the event of an accident.

For example, if you have a bodily injury liability coverage limit of $50,000 per person and $100,000 per accident, your insurance company will pay up to $50,000 in medical expenses for each person injured in the accident, up to a maximum of $100,000 for the entire accident.

The specific coverage limits for your liability car insurance policy are based on the requirements of your state, but also the amount you’ll need to protect your assets. It's important to carefully consider your coverage needs and work with an insurance provider to choose a policy with sufficient coverage limits, so you are protected when misfortune strikes.

This article was conceived, edited, vetted and cited by eLocal Editorial staff, and produced using artificial intelligence sources.