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Auto liability insurance comes in two basic forms. Bodily Injury Protection covers persons injured in an auto accident as a result of your actions. The amount can consist of coverage for medical bills and/or lost wages. Property Damage insurance covers property damage also arising from your actions. This can include not only car and truck damage, but other property that is damaged as a result of the accident.
All but two states, Wisconsin and New Hampshire, have mandatory requirements for drivers to carry at least minimum amounts of liability coverage. Those minimums vary substantially from state to state. Even for the two states which have no mandatory liability limits, the driver must be able to prove he or she has sufficient assets available to meet minimum amounts for both bodily injury and property damage.
How Liability Insurance Works
Drivers should keep in mind that requirements set by the various states are the minimum amounts required. Actual financial responsibility can range far higher than state liability auto insurance requirements. For instance, with respect to the medical costs incurred in an accident, such costs as hospital bills and doctor bills are now at an all-time high. It is easy to quickly exceed the maximum amount covered per accident if the automobile carries more than a passenger or two.
The increasing cost of automobiles and repairs affects the overall property damage cost. Considering the fact that the price for many cars and trucks now on the road exceeds $40,000 makes it prudent to carry considerably more than the minimum requirements for property damage. If you are involved with more than a single car, costs can quickly accelerate.
Any shortage in either bodily injury or property coverage becomes the responsibility of the driver. That means that if you are involved in an accident with two or three cars, each carrying multiple passengers, your assets are at risk if the injured party decides to sue for damage amounts not covered by your insurance policy. Some experts recommend $100,000 bodily injury, $300,000 per accident and $50,000 or more in property damage. Especially when compared to what can be at stake, the cost for the increased coverage should at least be a consideration.
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