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What Is Liability Auto Insurance?

By Compuquotes Team on March 27th, 2008
Auto Insurance

Liability auto insurance is one of the types of insurance that you can have for your vehicle. Liability insurance is usually coupled with property damage insurance and is one of the required insurances that you must have by law to operate a motor vehicle in the United States and Canada. The minimums on liability insurance were instituted because they cover any damage that you do with your vehicle to people and their property.

Liability insurance offers a fixed amount of coverage that you are legally liable to pay due to a collision or negligence on your behalf. Liability coverage is available in two policy types - combined single limit or split limit.

Combined single limit offers insurance for damage to property and bodily injury under one sum of money - such as $1 million. If a driver is in a collision with another vehicle and damages the vehicle as well as causes an injury to the other driver, the combined single limit policy would pay for the injury and the damage.

Split limit policies divide the liability insurance coverage into two categories, one for property damage and one for bodily injury. As the policy holder, you can choose to have two separate amounts for each of the coverage aspects. In the example given above, the bodily injury would be paid separately from the damage to the vehicle - the damage paid from the property damage portion and the injuries paid for from the bodily injury category.

Bodily injury insurance coverage is sometimes split into two categories on its own as well - maximum payment per person and maximum payment per accident.

Liability insurance and property damage is mandatory throughout the United States and each state has their own mandated minimums. It's important to note though that the minimum required by the state for liability insurance often isn't enough to cover damages in a medium level collision, let alone a serious collision.

The best decision you will make will be to take the most personal liability insurance that you can afford to pay for to ensure that you have the coverage you need if you are involved in a collision of any kind. While it may seem extreme, if you are involved in a serious collision where someone is grievously injured or killed, you may find yourself on the hook for a large sum of money if you don't have enough insurance. Swallowing the bill for a few hundred thousand dollars for a settlement in the injured parties favor is no easy pill.

Talk to your insurance agent about liability insurance and find out what they recommend as the minimum verses what the state recommends. Chances are, your insurance agent will tell you that they recommend a minimum of $1 million liability on a combined single limit policy. You should have more for bodily injury than property if you have a split limit policy, but they should total no less than $1million total. Your agent will be able to help you decide how much insurance you need and will be able to find you the best price from an insurance company.

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