Liability Coverage in an Automobile Insurance Policy

Since all but two states in the country, New Hampshire and Wisconsin, require drivers to have auto insurance with some liability coverage, liability insurance coverage is one of the most common types of insurance in the industry. In cases where actions of the policyholder have caused property damage or bodily injury to another party and the policyholder is legally liable for causing the damage, liability insurance coverage helps to pay for:

Bodily injury

If your actions are determined to be the cause of an automobile accident in which another party incurred injury, the amount of Bodily Injury coverage in your liability coverage will pay for that amount of health care for their injuries. Some liability insurance policies clearly indicate split limits which separate the amount of coverage for each party injured in an accident and the total amount of coverage available for each accident, such as 25/50/10, where:

• $25,000 is the most the policy will pay per person for bodily injury
• $50,000 is the most the policy will pay for coverage on each accident
• $10,000 is the most the policy will pay for property damage caused by the accident

Some liability coverage insurance policies covered a predetermined total limit such as $125,000, which indicates the maximum amount the policy will pay for bodily injury and property damage combined if the policyholder causes an accident.

Property damage

If a policyholder is found to be at fault in an accident that causes damage to someone else’s property, the Property Damage coverage of the policyholder’s liability insurance coverage will pay to have the damage repaired or replaced. What constitutes damaged property might include damages to other vehicles involved in the accident, new sod in someone’s yard, a replacement stoplight, displaced signage, etc.

As auto insurance is expensive, most drivers opt to pay for the minimum amount of liability coverage required by the laws of their state. However, a policyholder may choose to buy more than the minimum liability coverage that their state requires as a precaution against out-of-pocket expenses if the accident causes damage that exceeds the limits of their liability insurance.