Liability insurance is an essential form of insurance coverage as it protects the policyholder’s interest. Every policyholder, especially in auto insurance, is vital to carry at least a minimum amount of liability coverage. There are two forms of liability coverage, which is Bodily injury liability and property damage liability. These coverages cover, bodily injuries and property damage to the third party in an accident, the policyholder is at fault.
Why is liability insurance coverage is so Important?
Liability coverage is a necessary form of insurance that protects the policyholder for bodily injury and property damage you may cause to others in the event of an accident, and you are at fault. Most states require a driver to carry a certain amount of liability coverage, but surely it’s not enough to cover the entire damages you may cause to others. Liability insurance is not about protecting your car from damages due to an accident, and liability protects you against financial ruin and legal consequences that may arise.
Is Liability Insurance Require in the State Law?
Most states require drivers to carry at least minimum liability insurance which is a form of car insurance. In the united states, especially in California, if you own a car you must purchase car insurance to comply with the law. Failure to comply to carry at least the minimum amount of car insurance could lead you in violation of the law.
Liability Insurance Coverage
Liability Insurance: Bodily injury
The minimum coverage for bodily injury differs by state; it can be low as $15,000 per person or $30,000 per accident. If you are at fault in an accident, you might get sued for a considerable amount of money. You must carry high enough liability coverage to cover to protect your assets in the event of an accident.
Liability Insurance: Property damage
The minimum amount of coverage that you must carry differs by the state. Most insurance providers set a minimum of $5,000 of property damage liability. In some instances, the minimum amount may not cover all the damages you may cause to the third-party, as well as the repairs if you hit someone’s car.
Remember, any amount that may exceed your liability coverage limits will be your responsibility, shortly, you have to cover the expenses out from your own pocket. It is a wise move to choose higher liability limits above your state minimum requirements.
What is not covered by liability insurance coverage?
Liability coverage protects bodily injury and property damage you may cause to others. However, it does not provide coverage for damages done on your part, including your injuries after a car accident that you’re at fault. Though, other forms of coverage may protect your interest or cover damages on your part, such as damages to your car, your injuries, including your passengers.
Medical Payments Coverage
This form of coverage is a part of an auto insurance policy. Medical payment coverage covers the payment for your or your passengers’ medical expenses in the event; you suffer an injury in an accident, regardless of who is at fault.
- It may cover you from these medical expenses;
- Doctor hospital visits
- Surgery and X-rays
- Ambulance or emergency medical technician expenses
- Nursing services
This coverage is an optional basis and may not be available in some states. However, there is a form of coverage which is known as Personal injury protection (PIP). This form of coverage covers the expenses for other individual’s medical expenses, regardless of who is at fault. There are differences between Medical payments coverage and Personal injury protection.
PIP is available in states that are “no-fault,” and Medical payment does not. Medical payments are available in states that do not offer PIP.
PIP covers expenses such as lost wages or child care if you are not able to perform daily services due to injuries after a car accident. Medical payments do not provide coverage for essential services.
Comprehensive coverage covers the damage to your vehicle against a certain peril, such as fire, theft, hail, or vandalism. This form of coverage pays the repair and replace your car that is damaged by a covered peril. Comprehensive coverage has a deductible, that is the amount that is you need to pay from your pocket before the coverage kicks in. This form of coverage is usually optional, but if you’re financing a car, the lender may require this coverage.
Collision coverage may help cover the repair and replace of your car in the event you are in an accident with another vehicle or accidentally hit your car in an object. This coverage will help you cover the expenses up to the actual cash value minus your deductible.
Uninsured and Underinsured Motorist Coverage
If you were hit by a driver that does not carry any liability insurance to cover the damages, uninsured motorist coverage would cover your medical expenses. While Underinsured is if you are hit by an underinsured driver that carries insufficient liability coverage to cover the entire costs.
What is deductible in auto insurance?
An insurance deductible is an amount of money that you will pay in an insurance claim before the insurance coverage be sufficient and start paying you. If you have a deductible, you have to come up with an amount of money to pay the deductible before the insurance company pays the claim. Once you pay your deductible, the insurer will cover the rest of the claim up to the policy limits.
What factors could affect your car insurance premium?
Several factors can affect insurance premiums, such as the type of your car, your driving history, the coverages you choose, and the limits and deductibles. Some factors may include things such as your age and the anti-theft features of your car. It may be an unwise move to lessen the coverage to lower the premium amount.
- Type of your Car
Specific types of cars cost are more to insure, but if you drive your vehicle with security features like anti-lock brakes or anti-theft features, you may qualify for discounts.
- Driving Record
In an instance that you are involved in multiple accidents, the cost of your premiums is likely higher than a driver with a clean driving record.
How much you drive your car
An insurance company usually looks at how much you drive your vehicle. A policyholder that has a long commute going to work may pay higher for insurance than someone that uses vehicles just for errands.
- Type of Coverage
The coverage that you choose may affect the amount of premium you will pay; some coverage is typically optional for you to purchase. However, adding coverage to your liability coverage is much useful in your interest in the event of an accident that you also suffer an injury or property damage.
- Limits and Deductibles
A limit is the insurer will pay in a covered loss. Mainly, every coverage in policy has its own limit, and you can choose its own limit that suits your needs. The deductible is the amount you have to pay before your insurance helps you cover a claim. Typically, if you spend a much higher deductible, you will pay less in your policy premium.
What is not covered by Personal Car insurance?
Most states require a driver to carry personal car insurance; however, this form may not cover vehicles used in conducting business operations. If you are using your vehicle in business operations, you must purchase a commercial auto policy to cover the damages in your business use vehicles.
Benefits of having Car Insurance
Car insurance is designed to protect the policyholder’s assets and other properties in the event of an accident. You will pay each month in return for comfort, knowing that you have the protection against certain damages. Having car insurance will keep your financial interest, repairs, and replacement of your car’s damages. It also covers medical claims and provides coverage that protects you as the driver, including the passengers. Most important is, it protects you against the legal clause.
What is Umbrella Insurance?
Umbrella insurance policy is extra liability coverage that goes beyond the limit of the insured’s auto, homeowner’s, or watercraft insurance. This form of extra liability coverage provides a wide range of security to those who are at risk of being sued for bodily injury or property damage caused to other individuals in an accident. Umbrella insurance may be less expensive if you purchase the umbrella policy and your standard auto insurance in the same company.
How does Umbrella insurance policy work?
Umbrella insurance is a form of personal liability insurance that provides coverage against claims above auto, homeowners, watercraft policy. In an instance, you were sued for an amount of $1.5million for the damages that you are liable for. However, your standard auto insurance policy limits can only cover $1 million, and an umbrella policy will now take over the remaining $500,000 of the claim. This form of coverage protects the policyholder, including members of the family. Umbrella insurance covers damages to the third-party. However, it does not include the policyholder’s properties.
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