What Is Auto Liability Insurance?

One of the types of insurance that is available for your vehicle is liability insurance. Liability insurance is commonly one of the required insurances for you to have on your vehicle throughout the United States and in Canada. Liability insurance minimums were instituted because they cover damage that you do to other people and their property.

Liability insurance coverage is a fixed amount of coverage for damages that you are found legally liable to pay due to an accident or negligence. Liability insurance is available in two different policies, either as a combined single limit policy or a split limit policy.

A combined single limit policy covers damage to property and bodily injury under one specific sum of money, such as $1,000,000. For example, if a driver is in an accident with another vehicle and damages the vehicle and causes bodily injury to the other driver, the combined single limit policy with $1 million coverage would pay for both the injury and damage.

Split limit policies provide coverage divided into two categories: bodily injury and property damage. The policy holder can choose different limits for these two coverage aspects. In the example above in combined single limit, the insurance would pay for the injuries to the driver out of the bodily injury portion of liability insurance and the vehicle damage would be paid out under the property damage portion of the insurance.

Bodily injury coverage is often split again into a maximum payment per person and a maximum payment per accident.

Liability insurance is required throughout the United States and each state has their own mandated minimums. It's important to note though that the minimum required by the state for liability insurance often isn't enough to cover damages in a medium level collision, let alone a serious collision. It's a good idea to get as much liability insurance as you can afford with the lowest deductible you can afford. Even good drivers cause accidents and could be held liable for tens of thousands of dollars worth of damage to property and tens of thousands of dollars in bodily injury lawsuits and financial losses.

While that may seem extreme, it is the case in a major collision, especially if someone is seriously injured or killed in the collision. Paying a little extra each month for higher auto liability insurance is much easier to swallow that having to come up with the funds for a huge settlement ruled in the other party's favor.

Talk to your insurance agent about liability insurance and find out what the minimum is for your state and ask your agent how much that would cover in the event you did have an accident for which you were found at fault. Chances are, that coverage doesn't 'cover' much of anything at all. You can then speak with your insurance agent about appropriate levels of auto liability insurance for the way that you use your vehicle, where you drive it and the risk you have of being involved in a collision.