Auto Insurance Policies 101: Liability Coverage

by Anna Glendenning | More from this Blogger

14 Mar 2006 07:11 AM

Auto Liability Insurance - Protects you and your assets if you cause an injury to others or damage the property of others with your vehicle.

The standard insurance policy usually describes the amount of liability coverage you have as a series of three numbers, called split limits. Typically, these are the first series of numbers listed on an auto insurance policy and the most common coverage is offered as split limits.

The standard auto insurance contract with split limit coverage may read:

Coverage A Personal Liability

50,000/100,000/20,000

• Bodily injury liability is the first two numbers. $50,000/$100,000 in this coverage example. These are the limits for bodily injuries claims made against you and your insurance policy. The Bodily injury portion of your insurance policy protects you in the event you are determined to be responsible for an accident in which someone is hurt or killed. This covers damage or injury that you may cause to other persons. The key is that it involves your being held financially responsible for injuries to other persons because of the way you operated your car. This coverage does not apply to your injuries.
• Property Damage is the last number of split limit liability coverage, $20,000 in this coverage example. This is the limit for any damage that you may cause to the personal property of someone else. The key is that it involves your being held financially responsible for property you may damage or destroy because of the way you operated your car. Property Damage to cars, mailboxes, fences or other property of someone else, this coverage does not apply to damage to your property.

Another form of auto liability insurance may be Combined Single Limits (CSL) a bit less common, but in some cases offers a more broad form of liability coverage for an insured.

The standard auto insurance contract with combined single limit coverage may read:

Coverage A Personal Liability:

$300,000

• With combined single limit, coverage all bodily injury and property damage will be covered up to $300,000 per accident if you are held financially responsible because of the way you operate your car.

Every state's car insurance laws require a certain minimum level for auto liability insurance. It may be tempting to save some money by going with the minimum liability required in your state, but it is worth investing in a little extra protection, be sure you have enough liability coverage to protect your assets.

If you are judged legally liable for an accident, you may be held responsible for property damage, hospital and medical payments, rehabilitative care, lost income and even the pain and suffering of the injured person. You may be sued for all of the bodily injury and property damages and if the costs of the losses exceed the amount of your liability insurance coverage, you may have to pay the rest.

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Blogs In This Series: Auto Insurance Policies 101:

• Liability Coverage
• Uninsured & Underinsured Motorist
• Medical Insurance & Personal Injury Protection
• Optional Coverage-Collision
• Optional Coverage-Comprehensive
• Optional Coverage-GAP
• Additional Auto Insurance Coverage

Glossary of Insurance Terms:

A | B | C | D | E | F | G | H | I | J-K | L | M | N | O | P | Q-R | S | T | U-V | W-Z

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