What is liability coverage in auto insurance?

Introduction

Many people ask What is liability coverage in auto insurance? Liability coverage is the best form of car insurance. It protects you from people or organizations suing you for injuries and damage to their property. If you drive a car, chances are you need at least some liability coverage.

If you are like most Michigan drivers, liability coverage is the only kind of insurance you have on a vehicle. Liability means “you're liable” for damage that you cause to another person and their property. The other types of auto insurance coverage are collision and comprehensive.

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Liability coverage is insurance purchased by a motorist to protect against costs of bodily injury and property damage to others. These costs may occur when an automobile accident not involving one's vehicle occurs, or such an accident involving one's vehicle occurs.

What's liability coverage?

If you're insured, you're covered against losses that may occur due to accidents or intentional acts on the part of others. Liability insurance is a form of coverage that protects you against claims made by others who have been injured because of your negligence.

If someone sues you after an accident they caused while driving without insurance, there's no way to get their medical bills paid without liability coverage. It might be hard to even afford a lawyer because many lawyers won't take such cases on contingency unless they think they'll win money for their client — and how likely is that if the other driver doesn't have any assets?

What's included in liability coverage?

Liability coverage includes bodily injury as well as property damage liability. If you are at fault for an accident and someone is injured as a result, liability coverage pays for their medical bills and other expenses related to the accident. If your negligence causes damage to another person's property (such as a car), liability coverage will pay for repairs or replacement.

What's not included in liability coverage?

While liability coverage is designed to protect you from lawsuits stemming from accidents caused by negligent actions, there are some things it doesn't cover:

Bodily injury to yourself or passengers in your car unless you have purchased additional bodily injury coverage (and sometimes even then).

Medical expenses resulting from driving under the influence or while intoxicated.

How much auto liability insurance do you need?

The amount of liability insurance coverage you need is based on several factors, including the value of your assets, how much debt you have, and how much liability protection you have. Here's a closer look at these factors:

The value of your assets. If you have a lot of assets, such as real estate or other investments, you may want to purchase more coverage than someone who has few assets. Liability coverage can protect your assets in case someone sues you for damages they suffered in an accident caused by your vehicle.

How much debt do you have? If you have a lot of debt — credit card bills, student loans, auto loans, and mortgages — it's wise to purchase more liability insurance than someone with fewer debts because those debts are potential sources of income for the injured party if he or she wins a lawsuit against you.

The amount of liability protection you already have. If you are covered under an umbrella policy that provides $1 million in personal liability protection for each accident, then it may not make sense for you to buy additional auto liability insurance unless there is some other risk that isn't covered by the umbrella policy (such as medical payments).

Who pays if you're injured in an accident?

If you're injured in an accident and it wasn't your fault, you'll usually be able to claim against the person or company responsible for causing the accident.

Some accidents are 'faultless' – for example, if you slip on a wet floor in a shop and break your wrist, the shop might be liable to pay compensation. But if someone else bumps into you and knocks you over, they will probably argue that it was your fault (rather than theirs) because they didn't see you coming.

If they were at fault and caused the accident, they will be liable to pay compensation to cover their injuries. If they were not at fault, but still caused your injuries through negligence (for example driving too fast), then again they'll have to pay compensation for any injuries suffered.

How can I save money on auto liability insurance?

  It's a question every driver asks: how can I save money on auto liability insurance?

The answer is simple — by comparing quotes from multiple insurers. The more quotes you get, the better chance you have of finding the best deal.

But how do you go about getting those quotes? You could call up each company individually and ask for a quote, but that takes time and effort.

How does liability insurance work? It's simple really. All you need to do is enter your zip code in our free online quote comparison tool and it will pull up quotes from dozens of top-rated insurers in your area. Then all you have to do is pick the best deal!

 1. Raise your deductible

Raising your deductible is the easiest way to reduce your premium costs because it's one of the factors that insurers use to set rates. The higher your deductible, the lower your premium will be in comparison to someone with a lower deductible. However, this strategy works best if you have money set aside to cover a high deductible. If not, then it's better to keep your premiums low by choosing lower deductibles or bundling several types of coverage into one policy (see below).

2. Choose a higher liability limit

The amount of liability coverage that an insurer offers is usually lower than what's recommended by financial planners. This is because insurers want to keep premiums low so they don't scare away potential customers who need high coverage limits because they live in dangerous areas with lots of traffic accidents or carry expensive assets such as homes or jewelry that could be stolen or damaged by others if they were careless with them.

Conclusion

If you're reading this article, chances are that you're on the road a fair amount. And if you're on the road, there's an above-average chance that you're an auto owner. If that's the case, you need to understand what's called liability coverage and its place in your insurance policy.

If you're a new driver or are looking to switch auto insurance companies, liability coverage is a cost that you do need to consider. It's another one of those things that you assume must be just another part of basic insurance, but it isn't.

This type of coverage protects you from being sued if someone gets in an accident because of an incident caused by your vehicle. And if you've been sued? Liability coverage can help protect you from losing everything.