Liability Insurance: How Liable Am I?

Most people are familiar with this term as it is used more frequently than any other coverage term. Liability simply states that in the event of an automobile related accident, the person insured will be protected from certain liabilities to third parties, such as bodily injuries or death for which you are responsibly for. In the event of an accident lawsuit filed against you by the other party, Liability Coverage acts as a legal defense on your behalf. Although the amount of coverage you need varies from state to state, it is best to have enough insurance to cover claims against you, especially when pursuing legal matters. There is often a misconception that Bodily Injury Liability covers everything, including your vehicle. This is certainly not the case. Bodily Injury Liability Coverage ONLY covers injuries to people, not your vehicle. The same can be said for your medical expenses. Liability will only protect the policy holder.

Liability, The Same As Full-Coverage?

Actually, it's the complete opposite! In order to fully understand the confusion that is often associated with Liability and its coverage, let's take a look at full coverage insurance. Unlike Liability, full coverage isn't just limited to the policy holder. Instead, when a driver obtains full coverage insurance, not only are they protecting themselves, but the property, in this case, the vehicle is protected as well. In the incidence of an accident, your insurance company will pay for the medical expenses and repairs of both parties involved in the accident. Full coverage will also include incidents such as, fire, theft and flood damage, among others. This is important because many people look at Liability as full coverage, which as you now see, is far from being true.

The Importance of Liability Insurance

Picture yourself cruising down the road with your two best friends on deck. You are distracted momentarily by the happy conversation amongst friends and fail to stop at a stop sign. In an instance, unintentionally you strike another vehicle carrying a mother and her two teenage children. You turn around and realize that your two friends are seriously injured, as well as all three of the passengers in the car you hit. Because of your negligence in running the stop sign, every passenger (including your own friends) are able to sue you for their medical bills, pain and suffering, lost wages, funeral expenses and so forth. Without Liability insurance, you could be held responsible for all of the damages caused by your failure to stop at the stop sign. Unfortunately, purchasing Liability Coverage after the fact will not help you in this case, as insurance companies will not cover damages from an accident after it has occurred. With Liability Coverage, in the event that you are sued, the insurance company is responsible for hiring a defense lawyer in your behalf. It is recommended by The Insurance Information Institute that you carry Bodily Injury Liability Coverage of $100,000 per person and $300,000 per accident, however if purchasing higher limits is an option, it is safest to do so. Not having insurance coverage can cost you thousands of dollars, and your peace of mind. It's not worth it!