Understanding Coverage: Part 1 – Liability Coverage
Do auto insurance terms leave you feeling confused and unsure about whether you have the right protection? In this five-part series, you’ll find basic definitions to help you understand auto insurance better.
What does liability insurance cover?
Auto liability coverage is found in “Part A” of the personal auto policy. This type of personal liability coverage helps protect you financially from third-party claims resulting from an at-fault auto accident. Third-party claims are those brought by others and may include accident-related medical expenses, pain and suffering, lost income, vehicle damage or replacement, and other property damage, such as to a home or personal property.
The cost of repairing damage to your own vehicle is covered under collision or comprehensive coverage. Coverage for your own bodily injury, or injury to your passengers, would be covered under medical payments coverage or your own health insurance.
Medical payments coverage – “Part B” – pays accident-related medical bills for you, your passengers or a pedestrian your vehicle strikes. Some states may call this coverage something else, and/or require it.
How much liability insurance do I need?
Almost every state requires you to have some level of auto liability insurance. However, the amount of coverage required by each state, also known as state minimums, is often not enough coverage to provide the best financial protection you need for an accident. Amica recommends having at least 100/300/100 for your auto personal liability coverage. What these numbers mean is you would have a maximum limit of $100,000 of bodily injury coverage per person, a maximum limit of $300,000 of bodily injury coverage per accident, and a maximum limit of $100,000 of property damage coverage per accident. These three numbers are called split limits, because the total liability is split into three sub-limits. These are all maximum amounts of coverage and you’re not guaranteed these amounts in the case of an accident.
100 per person
A maximum limit of $100,000 of bodily injury coverage per person
300 per accident
A maximum limit of $300,000 of bodily injury coverage per accident
100 per accident
A maximum limit of $100,000 of property damage coverage per accident
Liability coverage can also be shown as a single limit, meaning you would see one limit on your Declarations Page. This one limit would apply to any combination of bodily injury and property damage claims, up to the maximum limit of coverage.
Depending on the assets you have to protect, you might want more coverage. With Amica, having liability limits of at least 250/500/100 qualifies you for an umbrella policy, which offers protection above what your auto insurance already provides.
Is liability coverage the same as full coverage?
The term “full coverage” in insurance is a fairly subjective term. There’s no official definition of full coverage. Full coverage to others might mean having enough coverage to adequately cover most loss exposures. Full coverage to some might mean having liability coverage, any other state-required coverages and physical damage coverage. Rather than simply asking for full coverage when quoting your auto insurance, it’s better to go through each coverage type individually to make sure you’re getting the right amount of coverage to protect you.
Does liability coverage follow the driver?
Car insurance coverage typically covers the car, but it’s not so cut and dried. If you let someone borrow your car and they get into an at-fault accident, your auto personal liability coverage may help pay for the other person’s medical bills and property damage. If your limits were to be exhausted, the driver’s limits could be secondary coverage.
Liability coverage is required in almost every state, and for good reason. If you’re at fault in an accident, the cost of medical bills and property damage can be very high, especially if there are multiple cars and people involved. It’s better to spend the few extra dollars a month for adequate liability limits than to cut corners. If you’re wondering how much liability insurance is right for you, an Amica representative is happy to discuss your personal needs and options.
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