To understand auto liability insurance coverage, let us take a situation in which a person ‘X’ who is driving a car hits another vehicle due to his own mistake. In this situation the other vehicle has got damaged and the driver of the other vehicle has also got injured. As, the person ‘X’ is held responsible for this accident he will be liable to pay the cost of the damages to both i.e. the physical damage of the car and the injuries caused to the driver of other vehicle.
Holding a Liability coverage, in this situation can help person ‘X’ to pay the damage cost against both the physical damage to car as well as the medical expense of the injured person. However if the person ‘X’ does not hold a liability insurance cover, he may have to pay all the bills from his own pocket. Therefore holding a insurance cover can save a huge amount in case of an unexpected event of accident.
Broadly, liability insurance cover has two basic components
1. Bodily injury liability cover &
2. Property damage liability cover
Usually, Liability insurance cover are offered in packages and are quoted as: A/B/C (Here, a b and c are the limits defined on various components of liability insurance cover).
‘A’ is the per person limit on bodily injury insurance cover. ‘B’ is the total limit on bodily injury insurance cover and ‘C’ is the limit on property damage liability insurance cover.
Let's take an example to understand it better :-
For a liability insurance package: 20000/50000/40000 OR 20/50/40
The maximum limit available for bodily injury cover for one person is $20,000.
The maximum limit available for bodily injury cover for any number of injured people is $50,000.
and, the maximum limit on property damage liability insurance cover is $40,000.
Are there any exceptions to the liability insurance cover?
This type of Insurance does not cover the cost of damage to your own vehicle and any of your injuries as these are not considered a liability on you.
However there are several other insurance policies like Auto Insurance and personal protection plans that can cover the cost of damages to you and your vehicle.
How much liability insurance cover is sufficient?
Generally, greater the liability insurance cover, more the protection cover you get on your personal finance in case of an accident. However, there are several factors which should be considered to derive an optimum limit liability insurance requirement. Click here to know 10 important factors to decide the limit for your liability cover.
Also, every states has its own minimum limit of auto liability cover below and everyone who drives the CAR should have at least the liability insurance with the basic limit. Penal actions may be taken against a person if caught without holding an active liability insurance having at-least the minimum limit.