Helpful Facts on Car Liability Insurance Coverage (2024)

Insurance is the defensefor your financial team (as an investment is an offense). When it comes to car insurance, you have a lot of choices and Car Liability Insurance Coverage is one of them. Since you have many choices, you should know as much as possible to decide on the coverage. You should know the facts and myths so that you can make informed decision

My coverage limits are absolutely minimum as per Florida state law. But, I am not asking you to go for the absolute minimum requirement, it must be driven by your absolute need. The amount of deductible you can afford, the amount of emergency cash you have saved, etc.

Having just the minimum coverage will not be sufficient even for minor accidents where you are at fault. The other driver may sue you for a bigger sum of money. Unless you have a high cash reserve or a very good lawyer at your disposal, I’d highly recommend having a sufficiently large coverage for your auto liability insurance.

I always ask my readers to be aware of the things and then make their own decision based on the information collected. Do not just copy what others are doing. That’s the purpose of this post; Know everything’s about auto liability insurance and then decide what’s right and what’s wrong, as this will be one of the financial decisions you’ll have to take many times in your life.

Here is a breakdown of the helpful facts of liability only car insurance

The Two Types of Liability Insurance

It is true that when it comes to liability insurance, there are two different types: property damage and bodily injury. Most drivers choose to get both types of coverage because it protects them if they are the cause of the accident. I opted for both.

If you are involved in an accident when covered by property damage liability, this means that the insurance policy will help to pay for any damages. If there are injuries to any person involved in the accident, whether they are the other driver or a passenger, bodily injury coverage will help to pay for any medical bills they may incur.

If you didn’t have this type of insurance you would have to pay for all the damages out of your own pocket and if you don’t have enough to cover it, then the people involved in the accident could sue you for your assets. Bodily injury may include medical expenses, loss of income and, sometimes, legal fees if you are sued.

If you hit a person and the person’s medical cost goes above your bodily injury limit, you’ll have to pay for the expenses from your assets. If you do not have high coverage,you may lose your lifetime worth of savings. So,put a lot of thoughts into deciding your coverage limit. There are stories galore of people declaring bankruptcy after meeting with an accident and being sued.

The Facts on Liability Limits

Liability coverage on your policy gives you the opportunity to choose the limits of the amounts covered for both property damage and bodily injury. According to American Institute of CPA’s, each state will set a minimum amount that you are required to carry but you do have the choice to set higher limits if you want.

When you look at your policy you will notice three different limit amounts. The first is for bodily injury for just one person, one is for bodily injury of an entire party involved in an accident and the last is for property damage.

Do You Only Need Minimum Coverage?

You may have heard that you only need a bare-bones plan in order to be fully covered in case of an accident, but this is not true. States do set the minimum requirements that you must carry on your insurance but this doesn’t mean that you will be fully covered. The limits on your insurance policy refer to the max amount that your insurance company is required to pay. If the limit is reached, then any amount after that will be your responsibility.

In order to set limits that you are comfortable with, you will need to think about the money that may be required to pay for someone’s medical treatment if they are badly injured. Do you think that $15,000 is enough? $30,000?

Medical bills can add up quickly and you wouldn’t want to find yourself responsible for a large sum of money because you didn’t set appropriate limits. The Insurance Information Institute suggests you carry higher limits, such as $100,000 for bodily injury for one person and $300,000 for bodily injury for the entire party involved.

Does Liability Insurance Cover Damage to Your Vehicle?

You might be under the impression that if you have liability property damage and bodily injury that coverage will extend to you or other passengers in your car, but this is not the case. Liability insurance will only cover the other party involved in the accident. If you opt out of additional coverage on your policy then you will be completely responsible for your own expenses related to the accident.

If you have a relatively nice car, then it’s strongly suggested that you add additional coverage to your policy. Collision coverage will help to cover any damage to your own car sustained in a crash, as well as any damage from vandalism, a fallen tree, theft or hail.

If you choose liability as well as additional coverage for yourself, you will need to decide on a deductible. The deductible is what you will need to pay out of your own pocket before the insurance company will start to pay. It is tempting to choose a low deductible, but choosing a lower deductible will increase your policy premium.

One of the ways to handle this situation would be to build sufficient emergency cash so that you can have a higher deductible. That high deductible will ensure you pay a lower premium for the insurance. We have a large emergency fund, so our auto insurance deductible is set as $2500. As a result, we pay a low premium.

You can also opt for medical coverage to pay for injuries sustained by you or someone in your car during an accident. Some states refer to this as PIP or personal injury protection, or it may be called medical payments. Either of these will pay for additional medical costs associated with an accident up to a certain amount.

Educate Yourself

So, there you have it, the facts on liability car insurance! One of the smartest things you can do when choosing a policy that works for you is to make sure you understand everything covered by the policy. Don’t hesitate to dig deeper into your research too.

There are plenty of great comparisons and full-service insurance providers, thatprovide great resources to help you understand the liability insurance car process. This way you won’t find yourself in dire circ*mstances you weren’t expecting if you are involved in an accident. Because when it comes to things like insurance, you can never have too much information.

Lastly, as with everything else that are on your buying list, do a comparison shopping. Online or offline, by calling insurance agents. Find out the best and cheapest premium for your insurance need.

Readers, share what you know, tell us your stories in the comments

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