Auto Liability Insurance

What does auto liability insurance cover?

Liability insurance covers you if you are found at-fault for an auto accident. Let’s say you make a left turn without checking your blind spot, and you don’t see an oncoming car, which causes you to run into their vehicle. Not only is the other car damaged, the driver says they have neck pain. Because your liability insurance covers the other person’s expenses, you won’t have to come up with the cash. Liability insurance coverage includes:  

• Medical costs
• Lost wages
• Pain and suffering
• Funeral expenses
• Repair or replacement costs of the other driver’s vehicle
• Repair or replacement of any other damaged property

Liability may also cover your legal bills, should the other driver or their insurance company end up suing you.

What does auto liability insurance not cover?

It’s very important to understand what liability insurance does not cover:

• Your medical expenses and lost wages
• Repair or replacement costs to your car

In short, your liability doesn’t cover anything that happened to your vehicle, and that’s why some people call it third-party liability. To protect yourself, your collision and comprehensive coverage will help cover these things, even if you are at fault.

Is liability insurance required?

The short answer: Yes, when you buy auto insurance, your policy has to contain a certain amount of liability coverage (there’s a certain amount required in all 50 states). The amount is specified by law.

How much liability coverage is required and what is recommended?

Each state sets a minimum amount of liability insurance you need on your car.

In the state of Ohio, for example, the minimum liability coverage for bodily injury per person is $25,000, bodily injury per accident is $50,000 and property damage is $25,000.

However, you may find that the state’s minimum may not be enough to protect you financially. Consider this. In 2016, the average liability claim for bodily injury was $16,110, according to the Insurance Information Institute. Yet, in seven states, the minimum bodily injury per person is set at $15,000. That means you could be out there driving with a good chance that minimum coverage won’t take care of all the costs.

Liability coverage limits explained

Here is how liability coverage limits work. Let’s say you had a car accident on the highway and you were found at fault. The driver was hurt and taken to the hospital with injuries. 

Let’s say your auto insurance had bodily injury coverage at $25,000 per person and $50,000 per accident. If the driver’s hospital bill came to $30,000, the first $25,000 would be covered, and you would likely have to come up with the remaining $5,000.  

If there are multiple passengers in the crash who also got hurt, the expenses could easily exceed the minimum limit set by the state.

Can you buy higher limits?

One option is to buy higher limits on your liability insurance. This will increase what you pay for premiums. But you’ll have peace of mind knowing you’re better protected.

Here’s something else to consider about the nature of car accidents. No one plans for them. That’s why they’re called accidents.

After the investigation, you could be found at fault for the crash. The cause could be chalked up to simple carelessness. Or maybe it was purely accidental, such as hitting a patch of ice and sliding into someone else’s car. Either way, when you are deemed the cause of any accident, you can be found responsible for other people’s medical costs along with damage to their car or other property.

What factors determine the cost of auto liability coverage?

If you purchase a higher limit on your liability insurance for the additional protection, you will pay a higher premium. However, many other factors can affect the overall costs of your car insurance. Here are a few:

• Credit history: Doing things like paying your bills on time may have an effect on what you pay for car insurance. Credit score is one indicator of how likely you are to file a claim.
• Driving record: Good driving habits, like avoiding speeding tickets, and avoiding illegal and dangerous activities, such as drinking and driving, may have a positive effect on what you pay for car insurance premiums. Again, the insurance company is analyzing the risk to insure you, and those who have a record of careless or dangerous behaviors behind the wheel are more likely to file a claim.
• Location: If you live and drive in a busy urban area, you’re considered more likely to file a claim than, say, someone who lives and works in a more rural area. In an urban area, the risk of accidents and vandalism are higher.
• Miles driven: Again, it all comes down to risk. The more miles you drive in your car every year increases the likelihood of an accident. The person with an hour-long commute may pay higher premiums than someone who, say, works from home.       

To help you understand your coverage and choose the right amount for your lifestyle and budget, talk to your ERIE Agent.