Knowing About Liability Car Insurance

Liability insurance is required in almost every state, and it’s a key way to protectyourself from personal lawsuits that may result from car accidents. It covers medicalexpenses and property damage you cause in an accident, up to your policy limits.Your liability coverage is typically listed as three numbers separated by slashmarks, for example, 50/100/50. These numbers reference the coverage limit forbodily injury and property damage in thousands of dollars. 1.Bodily Injury Liability Bodily injury liability insurance is a type of coverage that pays for injuries you causeto others. It covers medical bills and lost wages for the person you injure.It also includes legal fees if a lawsuit is filed against you for causing an accident. Itcan also pay for funeral expenses if the accident causes death.Some states require drivers to carry bodily injury and property damage liabilityinsurance, but you can add more protection with an umbrella policy.Depending on your state, you may need to purchase a minimum of $25,000 perperson and $50,000 in total for a single accident.Once you reach those limits, you’ll likely be responsible for the rest of the costs outof pocket.If you want to increase your insurance coverage, ask your American Family agentabout adding bodily injury liability. They’ll help you find the right balance ofaffordability and protection. 2. Property Damage Liability If you get in a car accident, property damage liability insurance pays out cash fordamage to someone else’s property. This includes homes, fences, lampposts,mailboxes, and more.It can also cover business losses if the owner has to close for repairs, such as astorefront or office that doesn’t open during construction.This coverage is a part of your liability car insurance policy along with bodily injuryand uninsured motorist coverage. It’s important to make sure you have the rightamount of property damage liability coverage.In most states, drivers are required to carry at least the state minimum for propertydamage liability. In some cases, you may need to purchase higher limits than thestate minimum. 3. Uninsured Motorist Coverage Uninsured Motorist Coverage or UM is a great way to protect yourself in the eventof an accident where the at-fault driver does not have liability car insurance. Thiscoverage usually adds a small amount to your policy, but it can be extremelyvaluable for drivers and their families.Uninsured motorist bodily injury coverage (UMBI) pays for medical expenses, lostwages, and pain and suffering after an accident. It also covers costs for passengerswho are injured in the accident.State-required limits for UMBI vary, so it’s important to know what your staterequires and purchase enough to err on the side of safety.Typically, UMBI comes in two limits: per person and accident. Some states allowyou to combine these limits into a single limit.Depending on the situation, you might also need uninsured/underinsured motoristcoverage for damage to your vehicle caused by an underinsured or hit-and-rundriver. This coverage often comes with lower deductibles. 4. Collision Coverage Collision coverage pays for repairs to your car if it’s damaged in an accident withanother vehicle or object. It also helps cover damages caused by things other thancollision, like theft, vandalism, and weather damage.No state requires you to have collision insurance, but some lenders require it whenyou finance or lease a car. If you don’t have it, you could find yourself paying forexpensive repairs out of pocket.Generally, collision insurance covers the repair or replacement costs of your carminus your deductible. If the cost of repairing your car exceeds its value, yourinsurer will write a check for the actual cash value (ACV) minus your deductible.If you’re planning to purchase a new car or have a high-value vehicle, collisioncoverage may be worth the cost. But it’s a risk you should consider carefully. Keep in mind that filing a claim against your collision coverage can raise yourpremium for the duration of your policy and three years after you make a claim. Soit’s wise to cover any minor damages out of pocket and tap your collision coverageonly when major repairs are necessary. 5. Comprehensive Coverage Comprehensive Coverage, which is also called “other than collision” coverage, paysfor damage to your car resulting from things other than an accident. These caninclude hail damage, theft, or fire.It isn’t required by law, but some drivers might prefer to purchase this insurance. Itcan also be a good idea if you live in an area that has high crime rates or wherenatural disasters are common.Collision and comprehensive insurance can be costly, so it’s important to considerthe value of your vehicle before you decide whether to purchase this coverage. Thebest way to do this is to compare the cost of premiums with what it would be toreplace your car out of pocket.If your monthly premiums are more than 10% of your car’s actual cash value, it maybe a good idea to drop comprehensive and collision coverage. This is commonlyreferred to as the 10% rule, and it can save you money on your monthly premiums. 6. Medical Payments Medical Payments (also known as MedPay), is an optional auto insurance coveragethat pays for medical expenses when you or a covered family member gets injuredin an accident. It doesn't matter who was at fault, and it applies to both you andyour passengers, whether you're driving or riding in someone else's vehicle orwalking across the street.MedPay works alongside your health insurance plan, and it can help bridge the gapbetween your medical expenses and the limits of your health policy deductibles orco-pays. It also can cover out-of-pocket costs for services your health insurancedoesn't pay for, such as dental work and specialized nursing care.While it's not required, medical payments and car insurance can save you a fortunein the event of an accident. However, it's important to consider how much MedPaycoverage you should buy and whether or not paying the added premiums is worththe risk. 7.Uninsured Motorist Coverage Uninsured Motorist Coverage, or UM, is an extra layer of protection that can helpyou pay for damages caused by a motorist who doesn't have car insurance. It alsocan help you pay for medical expenses if you or someone in your family is injured inan accident with an uninsured motorist.You can get UM coverage on both your personal auto policy and commercial vehiclepolicy. It can help you pay for unexpected medical bills, lost wages, and car repairsif you are involved in an accident with an uninsured driver or a motorist who doesn'thave enough liability coverage to cover the costs.Whether you need UM depends on your state's car insurance laws, the value of yourassets, and how much you can afford to pay out-of-pocket in the event of an accident. Most states require UM in the same amounts as your liability limits,though you can also choose to carry a separate limit. 8.Personal Injury Protection Personal Injury Protection, or PIP, is a type of auto insurance that helps pay formedical expenses and lost wages after an accident, regardless of who was at fault.It's required in no-fault states and can help you get your expenses paid faster thanyou would through a liability investigation or lawsuit.It may also pay funeral expenses for you or your loved ones. The amount ofcoverage varies by state, so it's best to check with your insurer to find out what isand isn't covered.It can be a very valuable addition to your car insurance, especially if you have highmedical insurance deductibles. It is also an excellent way to ensure you and yourpassengers are protected when they are in your vehicle or in someone else's. 9. Conclusion of Liability Car Insurance Liability insurance protects against claims made by others for bodily injury orproperty damage caused by a driver’s negligent actions while driving. It also helpspay for medical bills and legal fees if the other person files a lawsuit against you.A liability car insurance policy generally offers three different types of coverage.These are bodily injury liability, property damage liability, and uninsured motoristcoverage. In addition to these, some states require drivers to have additionalprotection, such as personal injury protection (PIP), and uninsured motoristcoverage.