Bodily injury (BI): Covers medical expenses, lost income, legal fees, and funeral expenses. Property damage (PD): Pays for damage you cause to another person’s vehicle or their property.
Auto insurers provide liability coverage for each type up to certain limits that are set out in your policy.
Alternate names: bodily injury liability insurance, property damage liability insurance, auto liability insurance
How Liability Auto Insurance Works
To understand how liability auto insurance works, consider the following scenario. Imagine you accidentally rear-end the car in front of you. This damages its bumper and throws the driver and passenger forward, injuring them. Your bodily injury liability coverage would pay for doctor visits and treatment for the driver and passenger (if you are deemed at fault for the incident). If they miss work due to their injuries, bodily injury coverage could pay their lost wages as well. Your property damage liability coverage would pay to repair their vehicle’s bumper. When an accident occurs, the drivers involved should ideally get a police report and exchange insurance information. This allows their insurance companies to better assess who is at fault, meaning who caused the accident and is liable for damages. Considering the accident’s details and the extent of damages, insurers can then decide how much to pay out. Liability auto insurance is designed to place a greater financial burden on the driver who causes an accident (or their insurer). After all, if someone is negligent or breaks traffic laws and harms you in the process, you don’t want your insurance company to have to pay out a big claim—potentially raising your premium as a result.
Coverage Limits in Liability Auto Insurance
Liability coverage is often expressed in a three number sequence like 25/50/25 (each referring to thousands of dollars for coverage limits). While each company may offer you different levels, they’ll use the same order for these numbers: If expenses exceed the limits you have available through your insurance policy, you’ll be responsible for paying the rest of the costs out of pocket. If the drivers involved have underinsured/uninsured motorist insurance, that coverage may help pay those costs as well.
Do I Need Liability Auto Insurance?
In most states, liability coverage is required. But there’s often variation in the minimum liability coverage requirements by state. For example, California requires minimum coverage of 15/30/5 ($15,000 BI per person/$30,000 BI per accident/$5,000 PD), while Texas requires 30/60/25 ($30,000 BI per person/$60,000 BI per accident/$25,000 PD). Some states even allow motorists to pass on liability insurance coverage. In Virginia, for instance, paying a $500 Uninsured Motor Vehicle (UMV) fee allows you to drive at your own risk. New Hampshire is another state that may allow you to drive without liability insurance. It doesn’t require a fee to drive while uninsured, but you may need to prove financial responsibility (that you can cover the costs arising from an auto accident) in some situations.
Alternatives to Liability Auto Insurance
One alternative to liability auto insurance is paying out of pocket if you are found liable for an accident. However, this isn’t always possible, given state laws, so your “alternative” may be purchasing the minimum coverage for your state and being prepared to cover any additional amounts out of pocket. But considering how expensive medical bills and property damage can be, it’s often a good idea to have robust liability coverage to protect your other assets.
How To Get Liability Auto Insurance
You can get quotes for auto insurance from individual insurance agents, online with individual companies, or from an insurance quote aggregator that finds quotes from a variety of different companies, allowing you to compare. If you think the liability coverage looks a little light, you can adjust your quote to request higher limits, which may only result in a small change to your monthly or yearly premiums.
