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FAQ: Demystifying Auto Insurance Definitions
What is liability coverage?
Nobody wants to think he or she will ever be responsible for an accident. Unfortunately, in most cases someone has to take the blame for damages or injuries incurred during a collision. Liability coverage is thus an important part of your auto insurance policy. It’s the coverage that helps you pay for damage to yourself, another person, or others’ property. If you’re the person held accountable for damages during an accident, you’ll be glad that you invested in liability coverage.
Liability coverage will compensate others for their losses if you're responsible for injuring another person or if you're responsible for damaging another person's vehicle or property. Liability coverage also helps you pay the costs of related lawsuits. Imagine if you had to pay for all this out of pocket!
There are 2 main types of liability coverage in your auto insurance policy: bodily injury and property damage coverage. Bodily injury coverage helps you pay for an injured person's medical expenses and lost wages if you're at fault in a car accident. Property damage coverage, on the other hand, will help pay for damages to another person's property (such as a fence, car, or home) if you cause an accident. Both types of coverage can also help protect you in the event of a related lawsuit.
Liability coverage is so important that most states require you to have it as a part of your auto insurance policy. Even if your state doesn’t require this type of insurance, it’s still wise to invest in adequate coverage. A few extra dollars a month could help you save thousands in the long run!
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