If there’s one type of insurance that you’ve heard of, it’s likely liability insurance. This is because most businesses, homeowners, and drivers need to consider it. It’s the type of insurance that helps to make sure you’re covered in the event of serious accidents. This is especially true if bodily harm is at play.
With the help of this coverage, you can save yourself hundreds of thousands of dollars. In this guide, we’ll discuss the pros and cons of the coverage, whether it’s necessary, and what it can help with.
What is Liability Coverage?
There are multiple types of liability coverage, though the most common is automobile liability insurance. You might also want to consider adding it to your homeowner’s insurance or your small business insurance.
As a driver, it’s your responsibility to make sure you have the coverage necessary in the event of an accident. With automobile liability, you will be able to handle any costs associated with crashes where you are found at fault.
With that being said, this isn’t the insurance that will cover your own personal expenses. Instead, it will cover the medical costs and vehicle damage to the other party.
There are two main types of automobile liability coverage: property damage liability and bodily injury liability. Additionally, most insurance providers will make sure that your liability coverage won’t have a deductible.
The Advantages of Liability Coverage
When you sign up for your insurance, there are plenty of reasons as to why liability coverage is a great idea. Some of the most well-known advantages include:
Bodily Harm Protection
If the accident that you are in results in the other party being physically harmed, your coverage will handle their medical costs. This is one of the main reasons as to why you need to consider this type of coverage.
Medical expenses, especially in the United States, can cost hundreds of thousands of dollars. Instead of paying out of pocket, your insurance policy will cover the costs. Additionally, liability protection will pay for any ongoing medical expenses as well. This may include physical therapy required beyond the date of the accident.
Vehicle Repair Protection
It’s quite likely the other party’s vehicle will be damaged in an accident. Similar to medical expenses, you would normally be responsible for any vehicle repairs as well. With your insurance, all repairs will be covered so you can protect your personal finances.
You can never predict what the other driver will do if you get into an accident. It’s quite likely they will bring a lawsuit to the table, which will incur an incredible amount of fees. Your automotive liability coverage will also help to protect you from legal fees.
Apart from vehicle damage, medical bills, and legal fees, liability also helps to cover any loss of wages reported by the third party. Additionally, it covers retail and home damages because of an accident.
Things to Know About Liability Coverage
There are plenty of questions to ask about insurance, especially if it’s your first time signing a policy. Knowing as much as you can about liability coverage is of the utmost importance.
Is Liability Coverage a Requirement?
To determine if liability is required, you’re going to need to look at your state laws. However, all insurance companies will let you know whether it’s necessary or not. Regardless, it’s recommended that you add it to your policy.
When creating your policy, you can typically choose to have liability coverage that is higher than the minimum for your state. It’s always better to have as much coverage as you can afford, as unexpected costs are always associated with accidents.
Does Liability Coverage Cover My Costs?
Liability is the type of insurance that is designed to protect you from third-party costs. Unfortunately, this means most of your personal costs associated with an accident are your own responsibility. This is where collision insurance comes into play, as it gives you coverage for your vehicle and medical costs. It’s always important to confirm what type of protection you have prior to finalizing your auto insurance.
What Are the Coverage Limits?
Other important factors to consider with liability coverage are the limits for the coverage. As mentioned, you can opt to have more coverage than what is required by the state. There are three different types of coverage limits to consider, which include:
Bodily Injury (Per Person)
Bodily injury from a per person perspective is the total payout for each person that is injured in an accident where you are found at fault.
Bodily Injury (Per Accident)
The per accident portion of bodily injury is the total amount of money your insurance provider pays for all medical expenses per accident. You’ll want to choose an amount that you’re comfortable with, as you could get into an accident with a vehicle with passengers.
Property damage limits are the total amount the insurance company will pay to repair the other party’s vehicle or property.
How Much Does Auto Liability Cost?
As you’ll want to make sure you’re managing your expenses to the best of your ability, you might be wondering how much this type of coverage costs. When it comes to determining the cost of any type of auto insurance, different factors need to be considered. With liability, it will vary based on your age, driving history, and where you live.
On average, drivers can expect to add between $250 to $800 per year to their insurance with liability coverage. With that being said, these amounts are far more affordable than paying hundreds of thousands out of pocket. As an example, according to the Insurance Information Institute, the average bodily injury claim is approximately $13,462.
When you’re choosing everything you need for your auto insurance, you need to make sure you are sufficiently covered. Not only will you want to protect yourself and your passengers, but you’ll also need to be able to cover a third party’s accident costs. With the help of auto liability insurance, you won’t have to pay out of pocket for someone else’s medical bills.
Additionally, you won’t have to pay for a third party’s damages to their property if you are found at fault. It’s important to discuss this type of coverage with your insurance provider no matter if it’s required in your state or not.