Bodily Injury Liability Protection (BIL)
Car insurance is no longer considered optional, and since it's required in all states in varying degrees, understanding your policy, along with what coverage you have and what you may need to add, has become a major part of financial planning. Of course, the purpose of automobile insurance is to protect you and your family from the unthinkable, the unplanned tragedies and accidents which do affect most families at some point. But what happens if your own actions are responsible for such an occurrence? That is the time bodily injury liability protection(Bil) comes into play.
What is Bodily Injury Liability Coverage?
This is the portion of your insurance policy that covers other people's bodily injuries or death when you are at fault in an accident. The injured party(ies) do not need to be in a vehicle, and so this includes accidental harm done to pedestrians. Basic medical expenses are covered, obviously, but there are other costs covered as well. These may include not only hospital care, but also emergency care at the accident scene. Should there be other needed medical services for resulting sickness, injury, or disease, your bodily injury liability protection may cover these expenses as well, including long-term rehabilitation and nursing care. Since accident victims usually experience income loss, compensation for this is part of the coverage. And in the unfortunate event of death, funeral expenses are paid.
It also provides for your legal defense in the event a lawsuit is filed against you. This is extremely important since the legal fees can easily run so high that, without proper coverage, they could likely lead to bankruptcy. All your valuable assets may be required by the court to be sold to satisfy the claim, and even if your only asset is your home, a judgment would likely be attached so that when you sell, the equity would be used to pay the accident victim, even many years later. And juries are well-known for entering major punitive pain and suffering awards when they feel it's warranted. So this leads to the question: How much coverage do you need?
How Much Bodily Injury Coverage is Needed?
Most states require this coverage, but keep in mind that in those states where it isn't required, drivers are not shielded from the responsibility for financial expenses incurred from an automobile accident. And often the state requirements are very low, unlikely to fully cover all the costs involved. Again, if your coveage limits were $25,000 and accident costs were $30,000, you would be responsible for the $5,000 difference, plus your deductible. So the importance of adequate coverage is obvious.
To determine how much coverage you need, a basic understanding of how the maximum coverage limits are written is necessary. There are two types of limits set for your policy, a maximum per person limit and a maximum per accident limit. This is referred to as split limits. For instance, there may be a $100,000 per person limit and a total accident maximum of $300,000. This is usually indicated in this format: 100,000/300,000 or $100,000/$300,000. One possible exception is sometimes called the Combined Single Limit policy where the limit of the injured persons' coverage is not restricted by the usual per person limit, but only the total accident maximum coverage. This coverage isn't available by all insurance companies and usually costs more.
While the cost of premiums is certainly a real consideration, the lasting financial harm that can result from not having high enough coverage, including loss of assets, savings, home equity, and future earnings, can plague a family for a lifetime. All it takes is just one accident. So insurance professionals and financial planners have set recommendations for policy coverage. You are encouraged to have policy limits equal to your total net asset value and possibly your expected future net worth that could be at risk.
Take into consideration your current financial situation and income, of course. If you don't own a home and have a relatively low annual income, little or no savings, and no other assets, it is unlikely that in the event of a lawsuit a lawyer would vigorously work to get a judgment for what isn't really there to take. On the other hand, take a yearly inventory of your current insurance coverage and your personal economic situation, and make adjustments upward when necessary. You would never consider driving your vehicle without gas in the tank, oil in the motor, and water in the radiator. Once you understand the importance of bodily injury liability, you will know it's just as crucial to your driving experience.
Always consult with an insurance agent who is willing to explain your coverage needs carefully with you. And remember, make sure you have proper Bodily Injury Liability Protection, as it can be one of the best investments you ever make.