Almost every state requires drivers to carry a minimum amount of liability car insurance coverage. What does liability insurance cover, you ask? Keep reading to find out when it will (and will not) come to your aid.
Liability Insurance Definition: What Does It Mean?
Confused like the kids in the video? Looking for an easy-to-understand liability insurance definition? To start, here’s a way to think about liability insurance: According to Merriam-Webster, the word “liability” means the state of being legally responsible for something. Basically, if you’re liable for something, you’re legally responsible for it.
When we talk about liability car insurance, a similar meaning applies. Liability car insurance offers you financial protection if you’re found liable (legally responsible) for property damage or injuries to another person in an accident.
So, What Does Liability Insurance Cover Exactly?
If you cause an accident that injures someone (or multiple people) and/or damages their vehicle or property, liability car insurance will help cover those expenses. Let’s break it down a bit more.
Types of Liability Insurance:
Liability car insurance isn’t only one type of coverage. Drivers in most states must carry two forms of auto liability, and both could come into play after an accident you cause.
- Bodily Injury Liability – protects you financially by helping pay for the other driver’s (and their passengers’) medical expenses and your legal services, if necessary.
- Property Damage Liability – protects you financially by helping pay for damage to another person’s property. In most cases, the damaged property is likely the other person’s car, but it could also be a mailbox, a fence, or a home.
A Real-World Example of Liability Insurance:
Say you’re driving home after a long, stressful day at work, and you’re distracted by thoughts of did I send that email or what’s for dinner. You’re approaching a four-way stop, but you don’t brake in time and rear-end the car in front of you.
Thankfully nobody has serious injuries. But the minivan needs some repairs, and the driver needs a brace for a sore neck. Can you guess who will be responsible for paying for the damaged vehicle and the minor injury? Yep, it’s you. You didn’t mean for it to happen, but the accident is your fault because you were not paying attention. You’ll be held accountable for the property damage and personal injury caused by the crash. Without insurance, you would likely be paying for the medical expenses and damages out of pocket, and you don’t want that because a car accident costs much more than most people think. But with liability coverage, your insurer would pay for the other driver’s doctor visit (bodily injury liability) and to repair or replace the other driver’s vehicle (property damage liability).
The same goes if someone else causes an accident that damages your car and injures you. They’ll be held accountable for any damages, and their liability auto insurance should help them pay for it.
Why Do I Need Liability Coverage?
Put simply, maintaining a minimum amount of car insurance is the law just about everywhere in the U.S. Every state has legislation requiring you to have proof of financial responsibility, meaning you can afford to pay for someone else’s property damage or injuries after an accident you cause. And because an insurance policy is one of the easiest ways to prove financial responsibility, 48 states require drivers to carry liability auto coverage (some states also require no-fault/personal injury protection and/or uninsured motorist coverage) in some amount. This is because liability car insurance coverage is designed to protect other people from damage you cause. For the most part, getting additional coverage that will help protect you (like comprehensive coverage or collision coverage) is not legally mandatory.
How Much Liability Insurance Do I Need?
Liability insurance laws vary from state to state, so it depends on where you live. The required amounts for bodily injury liability coverage and property damage liability coverage are often called “minimum limits.” The “limits” of your coverage are the maximum amounts your insurance company will pay, so the “minimum limits” set by your state are the minimum amounts of coverage you are required to carry. Liability-only car insurance, along with any other coverages required by your state, will keep you legal on the road.
Liability Coverage Limits
Auto liability coverage limits are typically written out as three numbers that represent the coverage limits for bodily injury per person, bodily injury per occurrence, and property damage. These numbers represent the minimum amount of coverage you must have to be road legal.
In Tennessee, for example, the minimum limits are 25/50/15. This means you’ll need coverage of:
- At least $25,000 per person injured in an accident (bodily injury)
- At least $50,000 for all people injured in an accident (bodily injury per occurrence)
- At least $15,000 for damage to another person’s property in an accident (property damage)
If you’re a Tennessee resident carrying less than these amounts, you’re not meeting the state’s minimum coverage requirements. And if you were to cause an accident, you would be stuck paying out of pocket for the other party’s injuries, property damage, and lost wages, as well as your own legal fees if you’re sued. Even if you don’t cause an accident, you could still be subject to fines and other punishment if you’re caught driving without liability insurance.
Look up car insurance laws by state in our Learning Center to find out coverage requirements where you live. Or, visit your state’s Department of Motor Vehicles website to make sure you’re complying.
Get a Free Liability Insurance Quote from Direct Auto
Still have questions about liability car insurance? We’d love to chat! Give us a call or stop by our nearest location. Our friendly agents can help you learn more about the coverage you need and get you a free quote.