Liability car insurance is a crucial form of coverage that protects you from the financial consequences of causing a car accident. It covers the cost of property damage and personal injuries to another party if you’re found to be at fault. However, liability-only car insurance does not cover damages to your vehicle or costs related to your injuries. In this article, we will explore the ins and outs of liability car insurance and help you determine if it’s the right choice for you.
Liability Car Insurance Coverage
Coverage limits for liability insurance are indicated by three numbers, which represent different types of liability coverage:
- Bodily injury liability (BI) per person: This covers medical bills, lost wages, and pain-and-suffering expenses for the other party involved in an accident.
- Bodily injury liability per accident: This represents the maximum amount the insurance company will pay out for bodily injury expenses per accident.
- Property damage liability (PD) per accident: This covers the cost of vehicle and other property damage, as well as any associated cleanup costs. It can also help pay for court costs if you’re sued.
For example, a liability insurance policy written as 25/50/25 would mean you have $25,000 in bodily injury liability coverage per person, $50,000 in bodily injury liability coverage per accident, and $25,000 in property damage liability coverage per accident.
What Does Liability Car Insurance Not Cover?
While liability car insurance is essential, it’s essential to understand its limitations. Liability coverage does not cover damages to your vehicle or costs related to your injuries. For these, you’ll need additional coverage options, such as collision insurance for vehicle repairs and medical payments coverage (MedPay) or personal injury protection (PIP insurance) for medical bills. It’s important to note that if you aren’t at fault for an accident, you and your insurance company won’t be responsible for the other party’s property damage or injuries.
Should I Get Liability-Only Car Insurance?
If you own your vehicle outright and don’t have an auto loan or lease, you may consider liability-only car insurance. However, if you have an auto loan or lease, you’ll likely be required to maintain full-coverage car insurance. It’s also worth considering your vehicle’s age and value. Full coverage, including comprehensive and collision coverages, is usually recommended for new cars. As a vehicle ages and its value declines, the maximum payout for a claim also decreases. Once your car reaches 10 to 12 years of age and its value drops below $10,000, it becomes harder to justify full-coverage car insurance as a good deal.
Liability Car Insurance Vs. Full-Coverage Car Insurance
A full-coverage car insurance policy typically includes state-required liability limits, collision coverage, and comprehensive coverage. Some policies may also include uninsured motorist coverage (UM) if required by your state.
Liability Car Insurance Vs. Full Coverage Car Insurance Costs
Liability-only car insurance often has the cheapest rates in the industry, especially compared to full coverage. This is because liability coverage provides fewer types of protection. Here’s a comparison of average annual estimates for liability coverage and full coverage:
| Insurance Provider | Average Annual Estimate for Liability Coverage | Average Annual Estimate for Full Coverage |
|---|---|---|
| State Farm | $523 | $1,457 |
| Geico | $465 | $1,198 |
| Progressive | $611 | $1,382 |
| USAA | $404 | $1,002* |
Note: USAA is only available to active-duty military members, veterans, and members of their immediate families.
FAQs
Q: Is liability car insurance enough to cover all my expenses in an accident?
A: Liability car insurance covers the costs of property damage and personal injuries to another party if you’re found to be at fault. However, it does not cover damages to your vehicle or costs related to your injuries. To ensure comprehensive coverage, additional options like collision insurance and medical payments coverage may be necessary.
Q: Can I save money by choosing liability-only car insurance?
A: Liability-only car insurance often has cheaper rates compared to full coverage. However, it’s essential to consider factors such as your vehicle’s age and value, as well as any legal requirements imposed by an auto loan or lease. Consulting with an insurance professional can help you determine the most cost-effective coverage for your specific situation.
Conclusion
Liability car insurance is a necessary aspect of responsible car ownership. While it covers the costs of property damage and injuries to another party, it does not protect against damages to your vehicle or costs related to your injuries. Whether liability-only car insurance is right for you depends on factors such as vehicle ownership status, age, and value. It’s crucial to carefully evaluate your needs and consult with an insurance professional to ensure you have the appropriate coverage to protect yourself and others on the road.
