All About Liability
Liability insurance is a term that gets thrown into just about every conversation about car insurance. Every time you look at an auto insurance quote online comparison, you’re going to see prices for liability coverage. But what is it, exactly? After all, you’re paying money to have it, so you should know what your money is being used for, and what liability coverage does for you.
What is Liability Insurance?
Liability insurance covers damages to other vehicles, people, or property resulting from accidents for which you are at fault. This includes paying for things like repairs to someone’s vehicle, the medical bills of those involved in the accident, and even paying to repair someone’s house if your vehicle damaged it. If you are not at fault for the accident, then the other person’s liability insurance will cover your expenses.
One thing to keep in mind about liability insurance is that when the accident is your fault, it does not cover any expenses that you may accrue, including medical bills and repairs to your vehicle. So unless you have additional coverage, such as comprehensive or collision, you will be responsible for paying for this out of your own pocket.
Do You Need Liability Insurance?
The simplest answer to this query is that yes, you do need liability insurance. Every state has laws requiring drivers to have a certain amount of liability insurance. The reasoning behind this is to protect drivers who are involved in an accident that is not their fault. The required amount of coverage varies by state, so you will need to check with your state’s department of insurance to see how much you will need. Once you know this, you can search for and compare auto insurance quotes online based strictly on your state’s minimum requirements. While some states require you to have additional forms of coverage, some states allow for you to choose whether or not you want to purchase a policy that will cover your own damages or injuries, such as comprehensive, collision, or uninsured/underinsured motorist protection.
Is the Required Minimum Amount Enough?
When you check your state’s website for the minimum amount of coverage you are required to have, you may see something like this: 10/30/15. These numbers indicate the amount of coverage your policy needs to have, multiplied by 1,000. The first number is to cover the bodily injuries of one person. The second number is to cover all of the bodily injuries resulting from one accident. Bodily injuries coverage includes emergency medical assistance, medical expenses, compensation for loss of income, funeral costs, and legal costs. The third number is to cover property damage, which includes vehicles, stationary objects, and buildings. So, using these numbers, you will need to have $10,000 for one person’s injuries, $30,000 for all bodily injuries in one accident, and $15,000 for property damage.
This may seem like a lot of money, but expenses resulting from an accident can add up very quickly. If the costs exceed your coverage, you have to pay the remaining balance on your own, so you want to make sure you have enough coverage in place. Depending on your state’s requirements, this may mean purchasing additional liability coverage.
According to the National Safety Council, in 2010, the average cost of an auto accident resulting in death was $1,410,000. The average cost of an accident resulting in an incapacitating injury was $69,200, and $22,300 for a non-incapacitating injury. The average cost of property damage resulting from an accident was $8,900.
The actual average cost of an auto accident varies by state and even by city. Your state’s department of transportation may be able to provide you with this information as it pertains to your area, which will give you a better idea of the amount of liability coverage you may want to have and whether or not the state’s minimum required amount of coverage will be enough.