Liability policies are designed to indemnify others for damages the policyholder may cause and they are mostly voluntary, but not auto. Probably one of the first thing people hears when they consider owning or driving a car is that they must buy insurance. In order to reduce vehicular accidents and help citizens after they happen, each state establishes rules and laws for getting driving licenses, registering and insuring cars. Let’s have a look at what is automobile liability insurance and why is it mandatory?
People should prepare for the worst-case scenarios before they get behind a steering wheel. We need to understand that we can cause an accident even if we are very careful and people can get injured and/or properties get damaged as a result. In such cases, we would be liable to pay for such losses and cost of recovery. Luckily there is an affordable solution that proposes to meet these costs on behalf of motorists, if it ever happens.
Liability car insurance can be defined as bodily injury and property damage coverage you must purchase in order to offer financial relief to people you may injure (bodily injury) or cause monetary loss (property damage) following a vehicular accident that was your fault. A basic policy includes Uninsured Motorist Coverage in some states and Personal Injury Protection in no-fault states.
Bodily injury covers at fault driver against third party claims for emergency and on-going medical treatments and loss of income. It also covers legal costs if the incident results in a lawsuit. Property damage component pays costs of repairing damages to other people’s properties like vehicles, homes and street fixtures, if it is caused by a crash that was policyholders fault. There is no deductible in such third party claims.
Auto Liability Insurance Limits
It is important to point out that insurers don’t usually offer unlimited protection. Generally, state determined minimum policy is very limited in its provisions. They may cover most incidents. But they are likely to fall short when you are involved in a large crash with multiple injuries and expensive cars. If your cover is exhausted they will sue you for the shortfall. That is why you should look into buying sufficient coverage to protect yourself against lawsuits. Auto liability limits explained in another post on this site.
What Isn’t Covered by Car Liability Insurance?
It doesn’t pay for damages to own vehicle. If you want to protect your own car you need to buy full coverage that comes with Collision and Comprehensive. It will cost you a bit more but you probably need it, especially if your car is worth a lot of money.
It doesn’t also cover your own and your family member’s injuries, unless you live in a no fault state where policies include Personal Injury Protection as well. For those injuries you need to rely on your health policy or buy Medical Payments Coverage.
Do I Have to Get Liability Automobile Insurance?
Every state in the US set their “minimum coverage” requirements. Every vehicle owner must buy at least this policy that comply with the laws and avoid consequences of getting caught without it. A basic policy may include several components as we discussed above. However, you cannot buy anything less than the minimum anyway since nobody is allowed to sell them.
How Much Does Average Liability Auto Insurance Cost?
Knowing the average rates in your state can help you determine if you are paying too much premium or not and you can find out by following the link above. Usually, rates can be substantially different from one zip code to another even in the same state. For example, you may pay a lot more than the average if you live in a poor neighborhood within a large city than if you live in a serene countryside.
Also, your rates will probably be a lot better if you are a mature driver with long and clean history and good credit score. The opposite is true for young or high-risk drivers who would be charged more for the presumed increased risk.
There are a few things you can do if you are struggling to pay the premium. One of the most effective solutions is to shop for the best rates and you can do that right here. You need to take your time to get a few quotes until you find the cheapest premium on offer. This may seem like a futile effort but you are wrong. Some people can reduce their premium as much as 80% in some areas, depending on how expensive the current insurer is and competition in the market.