Liability Car Insurance

Posted & filed under Knowledge Center.

An auto accident can happen in a split second. It can happen in less time than it does to dial a number on your cell phone, change a CD, or turn up the air conditioner. If an accident is your fault, you are financially responsible for damages to the other cars, drivers and passengers. Even if an accident is not your fault, a court can still determine that you are financially responsible. This is why you need liability coverage as part of your car insurance coverage.

“Liability” is a legal term that refers to responsibility for another person’s injury or loss. While questions about who is liable for what are typically decided in court, with settlements anywhere from thousands to millions of dollars. Having an insurance policy to protect you from such things is more than a good idea. In most states it’s the law.

Liability insurance is coverage from your car insurance company that pays the damages if you are in an accident. Claims will cause an increase in your premiums, but that still far outweighs the alternative, which is a court settlement.

Combined or Split?

Liability insurance for cars comes in two basic types, based on how the insurance coverage limit is determined. The limit is the maximum your insurance company is required to pay on your behalf if you are in an accident. The different types are split limit and combined single limit policies.

Split Limit policies are the most common, and have separate liability limits for property damage and bodily injury coverage. These are the numbers you see when looking at charts of state requirements, in configurations like 20/40/10. (The first number refers to the minimum amount of coverage per person, the middle number is per accident, and the third number is for property damage. All numbers represent that many thousands of dollars.)

Combined Single Limit policies cover everything in one policy, with one limit for everything.

As with all insurance, the higher the coverage limits on your policy, the higher your premiums, but since liability insurance is usually part of a larger auto insurance policy that also includes comprehensive and collision coverage as well as insurance coverage that will pay for damages if you are in an accident caused by an uninsured motorist, these limits are only a part of what makes up your total rate.

When shopping for liability insurance, it’s important to meet the required minimum coverage for your state (minimums vary greatly), but it’s also important to consider the whole financial picture. If you own a home or business, the state-mandated minimums are probably not enough coverage to protect those assets.

Remember also that your insurance company is only required to pay up to the limit of your coverage. If you are in an accident with multiple cars, and you are at fault (in some cases, even if you are not at fault) you can be sued for much more than the minimum coverage. After you request a liability insurance quote from, make sure you talk to the company you select, to make sure you’re getting enough coverage, and still staying within your budget.