Liability Insurance

Liability coverage is the foundation of any car insurance policy, and is required in most states. If you are at fault in an accident, your liability insurance will pay for the bodily injury and property damage expenses caused to others in the accident, including your legal bills. Bodily-injury coverage pays for medical bills and lost wages.

Property-damage coverage pays for the repair or replacement of things you wrecked other than your own car. The other party may also decide to sue you to collect "pain and suffering" damages.

Liability insurance (both bodily injury and property damage) is the foundation of most auto insurance policies and is ideal if you are seeking a low cost car insurance policy. Every state that requires auto insurance mandates the purchase of property damage liability, and Florida is the only state that requires auto insurance but does not call for bodily injury liability. If you are at fault in an auto accident, your liability coverage will pay all the expenses, bodily injury, property damage, and any legal bills. The bodily injury coverage would pay for medical bills and lost wages; the property damage coverage would pay for any auto repairs, or replacement. Property damage liability usually repairs damage to other vehicles, but can also cover damages to things such as lamp poles, fences, buildings, or anything else that your car may have struck.

Remember, although purchasing only the minimum can get you a cheap auto insurance rate, if you cause a serious accident, minimum insurance may not cover you adequately. That's why it's a good idea to buy more than what your state requires. If you own a home and have nest egg and a savings account, you should consider more liability insurance because, in most states, drivers are allowed to sue other drivers who injure them in car accidents. If you're sued and your liability insurance doesn't pay for all of the damages, your personal finances are on the hook, and it's likely you'll become a target.

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