Liability Auto Insurance: How to Make Sure You Have Enough Coverage

liability coverage

Purchasing auto insurance can seem like a simple enough task. You call an insurer or visit its website, answer a few questions and pay for coverage. Fast and easy, right? Well, yes and no. The process can flow very smoothly when determining which coverage you want; however, if you haven’t made the right choices, you can suffer immense financial hardship when in an accident.

Even if you’re thinking of buying only liability coverage, you need to know how to make the best decisions based on your state’s minimum requirements and your own financial situation. This way, you can ensure you don’t have to face thousands in out-of-pocket costs if you’re ever at fault in an accident.

What Is Liability Auto Insurance?

Liability auto insurance is coverage that pays for vehicle damage, as well as hospital and medical bills for other parties and individuals in your vehicle if you are at-fault in an accident.

Liability coverage is typically broken into two categories:

  • Bodily injury: Liability pays for the medical expenses incurred by others as a result of your actions behind the wheel. Coverage will pay for emergency and hospital care, medication, doctor’s visits, rehabilitation, lost wages, home-health care and funeral costs.
  • Property damage: This coverage pays for expenses you may have caused to someone else’s property while behind the wheel. Property can include a house, car, tree, fence, pole, mailbox or pet.

By acquiring liability coverage, you can ensure that all financial issues others suffer as a result of your accident are paid for without you having to come up with hundreds, thousands, or even tens of thousands of dollars on your own.

Do You Have Enough Liability Coverage?

One of the most unpredictable financial events is a car accident. It’s not only tough to determine the financial burden of any car accident, but it’s hard to know whether one will ever occur. With car accidents being so unpredictable, how can you know how much liability coverage you need?

The good news is 49 out of 50 states require liability coverage and have minimum coverage amounts drivers must acquire in order to operate a vehicle. These minimum amounts, however, can vary from state to state.

For example, in Missouri, drivers are required to carry $25,000 per person for bodily injury, $50,000 per accident for bodily injury and $10,000 per accident for property. In California, on the other hand, drivers are required to carry $15,000, $30,000 and $5,000, respectively.

The best way to find out how much liability coverage you are required to carry in your state is to visit your state’s Department of Motor Vehicle website. Also, keep in mind that state minimums are not maximums.

You should consider how much hospital visits, medical bills, medication, damage to vehicles and more really cost, and then think about how much you already have in your bank account. If you don’t have enough to cover the out-of-pocket expenses that surpass state minimums, you’ll want to raise the coverage amounts to a payout that is comfortable for you.

(Image: daveynin)