Auto Industry Insider: What Level of Liability Car Insurance Do You Need?

Insurance is one of the most confusing financial responsibilities we all have. Even when you look at one particular kind of insurance, you need to sift through a ton of information. That is certainly the case with car insurance. The complexities may make you want to simply give up, but unfortunately, this is not an option.

In nearly all states in the US, some level of car insurance is required by law. Driving without insurance can get your license suspended, among other penalties. And, if you cause a collision, you may end up in major financial straits.

Why is car insurance required by law? The answer lies in the type of car insurance required. You do not have to get personal insurance, although it is recommended. You can gamble with the possibility of losing an expensive asset and having to pay your own medical bills. When it comes to your responsibility to others, however, you cannot avoid accountability.

Therefore, the insurance you need to get according to the law is liability car insurance. Liability insurance pays out claims that others make against you in a case where you are responsible for a collision.

What kinds of liability car insurance are there and which do you need? Here is what you need to know.

Bodily Injury Liability

The first kind of liability insurance we will talk about is bodily injury liability. The answer to what does bodily injury cover has a number of facets, all of which are specific to people you hurt in a collision.

Bodily injury liability covers expenses that occur when someone is injured by a collision that you caused. This does not just include their immediate medical bills, but also further bills that come about due to long-term complications from their injury.

Your responsibility does not end at medical bills, however. You may also be required to pay for income lost due to the injury. In circumstances where the individual is a primary caregiver to children, you may need to pay for childcare.

The amount of bodily injury liability you are required by law to get varies from $10,000 to $50,000, depending on state. However, you may want to get higher coverage, as in many circumstances, expenses rack up. This is particularly true if you injure more than one person in the collision.

Without bodily injury liability, you will be required to pay out of pocket for these expenses. If your insurance does not fully cover the individual’s bills, you may be required to pay the difference.

Property Damage Liability

Of course, you are unlikely to only cause injury in a collision. In all likelihood, you have damaged the individual’s car or personal possessions as well. These are also your responsibility to pay. For this, you need property damage liability insurance.

As with medical bills, these expenses can very quickly skyrocket. If you damage a car that is used for the purposes of the person’s income, as is the case with rideshare drivers, you may have to pay for loss of income from your property damage liability insurance.

When getting liability insurance, these are the two kinds of liabilities you need to account for. You should try not to skimp on liability insurance, as you can land up in serious financial and even legal trouble.

There are states where liability insurance is not required by law, and in some cases you can prove you have the net worth to pay any future claims. However, you should have liability insurance nonetheless, as it will save you a lot of money if something happens.

Personal Cover

Liability insurance does not pay for your own medical bills or car repairs. While these will be paid for if someone else hits you, you should get personal cover in addition to liability cover. The reality is that accidents happen, and the loss of a car you are still paying off or the major medical expenses that may result can lead to dire financial straits.

Liability car insurance is the bare minimum you should get, including cover for bodily injury and property damage. But even though it is not required by law, you should consider getting personal cover as well.

Car insurance can seem complicated, and there is still the matter of deductibles and premium calculations to discuss. However, the above information gives you the basic understanding you need of the types of car insurance you cannot do without.