Liability insurance is required in almost every state, and it’s a key way to protect
yourself from personal lawsuits that may result from car accidents. It covers medical
expenses and property damage you cause in an accident, up to your policy limits.
Your liability coverage is typically listed as three numbers separated by slash
marks, for example, 50/100/50. These numbers reference the coverage limit for
bodily 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 cause
to 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. It
can also pay for funeral expenses if the accident causes death.
Some states require drivers to carry bodily injury and property damage liability
insurance, but you can add more protection with an umbrella policy.
Depending on your state, you may need to purchase a minimum of $25,000 per
person 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 out
of pocket.
If you want to increase your insurance coverage, ask your American Family agent
about adding bodily injury liability. They’ll help you find the right balance of
affordability and protection.
2. Property Damage Liability
If you get in a car accident, property damage liability insurance pays out cash for
damage 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 a
storefront or office that doesn’t open during construction.
This coverage is a part of your liability car insurance policy along with bodily injury
and uninsured motorist coverage. It’s important to make sure you have the right
amount of property damage liability coverage.
In most states, drivers are required to carry at least the state minimum for property
damage liability. In some cases, you may need to purchase higher limits than the
state minimum.
3. Uninsured Motorist Coverage
Uninsured Motorist Coverage or UM is a great way to protect yourself in the event
of an accident where the at-fault driver does not have liability car insurance. This
coverage usually adds a small amount to your policy, but it can be extremely
valuable for drivers and their families.
Uninsured motorist bodily injury coverage (UMBI) pays for medical expenses, lost
wages, and pain and suffering after an accident. It also covers costs for passengers
who are injured in the accident.
State-required limits for UMBI vary, so it’s important to know what your state
requires and purchase enough to err on the side of safety.
Typically, UMBI comes in two limits: per person and accident. Some states allow
you to combine these limits into a single limit.
Depending on the situation, you might also need uninsured/underinsured motorist
coverage for damage to your vehicle caused by an underinsured or hit-and-run
driver. 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 with
another vehicle or object. It also helps cover damages caused by things other than
collision, like theft, vandalism, and weather damage.
No state requires you to have collision insurance, but some lenders require it when
you finance or lease a car. If you don’t have it, you could find yourself paying for
expensive repairs out of pocket.
Generally, collision insurance covers the repair or replacement costs of your car
minus your deductible. If the cost of repairing your car exceeds its value, your
insurer 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, collision
coverage 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 your
premium for the duration of your policy and three years after you make a claim. So
it’s wise to cover any minor damages out of pocket and tap your collision coverage
only when major repairs are necessary.
5. Comprehensive Coverage
Comprehensive Coverage, which is also called “other than collision” coverage, pays
for damage to your car resulting from things other than an accident. These can
include hail damage, theft, or fire.
It isn’t required by law, but some drivers might prefer to purchase this insurance. It
can also be a good idea if you live in an area that has high crime rates or where
natural disasters are common.
Collision and comprehensive insurance can be costly, so it’s important to consider
the value of your vehicle before you decide whether to purchase this coverage. The
best way to do this is to compare the cost of premiums with what it would be to
replace your car out of pocket.
If your monthly premiums are more than 10% of your car’s actual cash value, it may
be a good idea to drop comprehensive and collision coverage. This is commonly
referred 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 coverage
that pays for medical expenses when you or a covered family member gets injured
in an accident. It doesn’t matter who was at fault, and it applies to both you and
your passengers, whether you’re driving or riding in someone else’s vehicle or
walking across the street.
MedPay works alongside your health insurance plan, and it can help bridge the gap
between your medical expenses and the limits of your health policy deductibles or
co-pays. It also can cover out-of-pocket costs for services your health insurance
doesn’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 fortune
in the event of an accident. However, it’s important to consider how much MedPay
coverage you should buy and whether or not paying the added premiums is worth
the risk.
7.Uninsured Motorist Coverage
Uninsured Motorist Coverage, or UM, is an extra layer of protection that can help
you pay for damages caused by a motorist who doesn’t have car insurance. It also
can help you pay for medical expenses if you or someone in your family is injured in
an accident with an uninsured motorist.
You can get UM coverage on both your personal auto policy and commercial vehicle
policy. It can help you pay for unexpected medical bills, lost wages, and car repairs
if you are involved in an accident with an uninsured driver or a motorist who doesn’t
have enough liability coverage to cover the costs.
Whether you need UM depends on your state’s car insurance laws, the value of your
assets, 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 for
medical 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 than
you would through a liability investigation or lawsuit.
It may also pay funeral expenses for you or your loved ones. The amount of
coverage varies by state, so it’s best to check with your insurer to find out what is
and isn’t covered.
It can be a very valuable addition to your car insurance, especially if you have high
medical insurance deductibles. It is also an excellent way to ensure you and your
passengers 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 or
property damage caused by a driver’s negligent actions while driving. It also helps
pay 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 motorist
coverage. In addition to these, some states require drivers to have additional
protection, such as personal injury protection (PIP), and uninsured motorist
coverage.
