An Overview Of Car Insurance Liability Coverage
Liability coverage is one of the most common forms of auto insurance because it's mandatory. However, many people still don't understand the coverage. Below are a few things you should know about auto insurance liability coverage.
It Pays Multiple Things
Your liability coverage pays two main categories of damages. First, the coverage pays for your legal defense if someone accuses you of property damage or bodily injury. Say a pedestrian accuses you of knocking them down and causing them injuries. Your liability coverage will pay your legal defense costs and court fees.
Secondly, the coverage compensates those who have legitimate liability claims against you. For example, the coverage will pay to repair the other driver's car if you lose control of your car and crash into another.
It Has Different Limits
Each car insurance policy comes with different limits for different losses. Below are some of the limits.
The property damage limit determines how much your insurance company pays for property damage per accident. For example, a $50,000 limit means the insurance company will only pay that amount even if you accidentally total a $250,000 supercar.
Insurance companies have two sub-limits for bodily injuries. The first is a per-person limit that determines how much each accident victim can get. For example, an accident victim claiming $150,000 may only get $100,000 if that is latter is your policy's per person limit.
The second is a per-accident limit, which specifies the total bodily injury compensation your insurance company pays for a single accident. Say an accident leaves three people with medical bills totaling $300,000, but your per accident limit is only $200,000. The insurance company will prorate the compensation for each victim such that the total does not exceed $200,000.
The State Limits Are Relatively Low
State insurance laws determine how much liability insurance each person should carry. For example, a state may demand 50/100/50, which means a $50,000 per-person limit for bodily injury, $100,000 per-accident limit for bodily injury, and $50,000 limit for property damage.
Many states' limits are relatively low if you compare them to losses that accidents typically cause. The onus is on you to pay the damages above your insurance policy's limit in case of an accident. Luckily, you can and should buy coverage above the government's prescribed limit.
The Limits Automatically Adjust Out of State
Lastly, you do not have to worry about your liability limits if you are involved in an out-of-state accident. Your auto insurance policy automatically adjusts to match the applicable state's limit for short visits. However, the adjustment doesn't apply for extended stays or residency; update your coverage or buy another policy if you move out of state.
To learn more or to invest in auto insurance, talk to an agency—such as The Lofrumento Agency, Inc.—today.