What is Auto Insurance Liability Coverage?
The liability coverage of auto insurance covers the medical and collision costs of an accident caused by the policy holder. Auto insurance liability is not a hot topic among people. Such an insurance policy is often taken for granted by vehicle owners. With its importance, drivers in most states in the United States are now required to purchase auto insurance policy.
Auto insurance liability means that when an accident happens, the driver who is at fault will not be liable to pay for the damages from his own pocket. The insurance company, instead, takes the responsibility to pay for such damages. The insurance company pays for all everything that is needed to repair the damages. The auto insurance policy covers the expenses up to the maximum amount indicated in the insurance policy. Two types of liability coverage are bodily injury, and property damage liability. Bodily injury pays for the medical bills of the other party in case he obtains an injury, while property damage liability covers the expenses for repairing damages done to the other party’s car or property.
Auto insurance liability coverage may either be combined into a single coverage or purchased separately. In most states, drivers are required to purchase minimum liability coverage, which will emphasizes on the policy holder’s responsibility to pay for the other person’s medical expenses once found to be held responsible for the accident.
A driver should purchase an auto insurance liability, because it will cover the driver’s expenses if ever he has been proven to be legally responsible for causing injury to another person. Liability coverage can not be removed, but the premium may be reduced. Reducing the premium, however, provides more risks. Since insurance companies are only able to cover a specific amount, in case cost of damages are more than the amount insured, the driver at fault will be responsible for paying off the remaining expenses. This is the major risk in reducing your premium.
It is recommended by experts that drivers maintain a liability limit of $1 million. It may look shockingly high, but there are a lot of things a driver must take into consideration: possible bodily injury claim, legal fees, and damages. Drivers are aware that it is wise to maintain a higher limit, but most of them believe that this event will never happen.
Car rental companies offer drivers a liability coverage while the car is in their possession. It is, however, up to the driver if he will accept it. If ever an accident happened and the driver at fault is using a rental car, damages are still covered by insurance companies. If the driver has insurance for his personal vehicle, the auto liability insurance will extend to rental cars. Therefore, accepting insurance coverage from the rental company is unnecessary if the driver already owns a liability policy.
Most drivers know the essence of purchasing a liability policy, but don’t necessarily mind its importance in the long run. It is, therefore, important, to take your time to understand the coverage of an auto liability insurance policy.