What Is the Most Important Auto Insurance Coverage?

When driving, liability coverage is the the most important car insurance coverage you need for many reasons. Every state mandates that vehicle owners provide proof that they can meet their financial responsibility if they cause injuries and damages to other people in an accident they are at-fault and require purchase of liability coverage at least at minimum levels determined. Financially, liability coverage stands to pay for third party claims against you and you are left on your own without it.

Even though it is the most valuable insurance a driver can buy, liability auto insurance doesn’t cover your own automobile. You will need a full coverage policy if you want to provide for third parties and protect your own automobile. You will also need Personal Injury Protection (PIP) to cover your and your family’s injuries and this coverage is mandatory in no-fault states. Otherwise, you may choose not to buy PIP if you have health insurance. A few states require Uninsured/Underinsured Motorists Bodily Injury coverage, which pays for your and your passengers’ injuries when an uninsured driver causes them, as part of the minimum required insurance. U/UMBI is a valuable coverage if you don’t have health insurance for yourself and your family.

Here are some of the reasons why liability vehicle insurance is the most essential coverage if you want to start driving;

  1. It is legally required and liability is the only auto insurance coverage police and other law enforcement agencies will check.
  2. You get a ticket, your vehicle can be impounded, pay fees and costs and you may even be jailed in some cases. Driving uninsured is a misdemeanor offence in most states. You run the risk of going to jail if you cause an accident while you are uninsured or if this is a repeat offense.
  3. Generally, liability coverage is checked and also required to obtain and maintain vehicle registration through the DMV.
  4. You never know how big liability claims can get as there are no upper limits to what damages can be caused in an accident and how much people can claim on you if you are the one who caused it.
  5. You have to pay out of pocket. If you don’t have the coverage or it isn’t sufficient to pay for all the losses, you are left alone to pay for the rest of the injuries and damages out of pocket.

You need Comprehensive and Collision coverage to insure damages to your own automobile and therefore many people may think that these should be the most important car insurance you should buy. And you have to have these covers to get an auto loan but it doesn’t take away the importance of liability coverage.

Your vehicle has a certain value and what you can lose is limited with that valuation. If your automobile is stolen, burnt in fire, swept in a flood or totaled after an accident, the most you can get from your insurance is the actual cash value of your auto. So, it has an upper limit to what you can lose.

In case of liability automobile insurance, every state sets the minimum level of coverage but there are no upper limits to possible claims against you. Without exaggeration, it can reach tens of thousands of dollars easily at current prices.

Also, if you lose your car, you can decide not to buy another one for a while and use public transport. Or you may just get a vehicle you can afford and get on with your life. You don’t have this choice with liability claims. Actually, you have no choice over what the injured third parties and property owners can claim from you. If they are injured and, in the hospital, their bills need to be paid. If they lost their automobiles, you need to replace them. And you have no idea how expensive that car can be.

That is why, not only do you need liability vehicle insurance but you should also arrange a sufficient level of coverage, if you can afford it. Usually, a state required minimum liability coverage is depicted as 25/50/20. In that, $25,000 is the maximum amount your auto insurer will pay for one injured person, $50,000 is the ceiling for all injured people and $25,000 for property damages.

These figures are nowhere near enough in today’s prices and these levels are lower in some states. $25,000 hardly covers a medical operation and won’t cover multiple operations and physiotherapy, even before getting into pain and suffering. And $25,000 isn’t enough for most cars on the roads these days.

That is why most experts recommend 100/300/100 level of liability car insurance as more comfortable protection for third party claims you may have to face. If you have sufficient coverage, your insurer steps in to compensate those unfortunate people. If you don’t, they will stop at the level they cover and you will have to pay the difference out of pocket putting your home and other assets on the line.