What is Liability Insurance?

There are a lot of drivers out there, with a lot of different ideas about the best way to drive. But there are some things all drivers can agree on:

Car accidents are bad news

Car insurance costs too much

One way you can keep your auto insurance costs low is by buying only the legal minimum. This is liability insurance coverage, and here's everything you need to know:

Liability Insurance Defined

There's no one type of insurance which is the Absolute, 100% Best Choice Guaranteed. Instead, the best type of insurance is whatever fits your needs, vehicle and budget.

That said, there is one type of insurance which is clearly the most popular type of insurance. That's the "I need to meet my state's legal minimums for car insurance" insurance.

This is called Liability Coverage.

Liability Requirements Vary by State

Car insurance is NOT regulated by the federal government. It's a state thing. This explains why liability requirements vary from state to state.

Of course, there's one constant across almost all states: You need liability insurance if you want to drive on the road. Liability insurance is the state minimum.

When "the Minimum" is a Good Thing

The minimum isn't always a good thing. Nobody rushes out to see the latest blockbuster on the smallest screen in town. People don't want to "Minimum-Size" their meals at McDonald's.

But sometimes the minimum is all that you need. Liability insurance doesn't offer a lot of coverage, but it's the cheapest way you can protect yourself behind the wheel.

The word "liable" means "legally responsible." Liability insurance protects the other driver if you end up causing an accident.

Liability insurance is a good choice if:

·        You only want (or can afford) the least expensive type of insurance

·        Your car is very old, in bad condition or otherwise in not-so-great shape

We get it. More expensive insurance coverage is, well, better. You can cover damage to your car, personal injuries and any of the countless other damages which can occur due to a car accident.

But sometimes we have to choose the minimum amount of coverage, at least for the short term.

What Do I Need to Know about Liability Insurance?


Here are three quick facts to keep in mind:

1. Liability Insurance DOES NOT Cover Uninsured Motorists.

Liability coverage is for damages caused by you to other drivers. A liability policy doesn't pay damages on your behalf.

Additionally, liability coverage doesn't cover damages caused by an insured driver. For that, you'll need uninsured motorist coverage.

2. Liability Insurance WILL NOT Cover Your Medical Bills

If you're injured in an auto accident, your medical bills are your responsibility. In some cases, your bills might be paid by the other party's insurance coverage – but only if that person is found to be at fault for the accident.

3. Liability Coverage DOES NOT Cover Hit and Run

Unless it's damage you caused others, you'll have to pay out of pocket. Liability insurance doesn't cover hit-and-runs, hail damage, car theft and similar incidents.

Why Should I Get Liability Coverage?

With all the things Liability Coverage doesn't do, it can be easy to overlook what it does do.

First, and most important, liability coverage lets you drive legally. Also, liability insurance provides you with the following types of coverage:

1. Bodily Injury per Person

This covers the medical bills of any single individual injured in an accident which you're at fault for.

2. Bodily Injury per Accident

This covers the medical bills for ALL injuries in one accident

3. Property Damage

This covers damages to any property which was damaged by your car in an accident. Note this property does not include your own property (i.e. your car).

How Liability Coverage Works

All three of these categories are covered by one liability policy. The coverage is described in three numbers. A common example would be 25/50/25. This is $25,000 per individual injured, $50,000 for all injured parties total and $25,000 for property damage.

With the exception of New Hampshire, you'll need at least liability coverage. Some states require additional coverage.

Some common insurance policy "extras" include:

·        Collision Insurance – this covers damage caused to your car if you're at fault, such as if you back into a stationary object or drive over a curb.

·        PIP Coverage – A Personal Injury Protection policy will cover medical bills for both you and all your passengers

Is Liability Coverage the Right Choice for Me?

We know you don't want to drive around uninsured. Not only is that totally illegal, it just doesn't make financial sense.

If you're at fault for an accident, you'll end up paying for any damages out of your own pocket. This could include extensive medical bills, car repair, property damage or even new car purchase. And that's not even counting the fines and other legal trouble you'll be in!

So, in that sense, liability coverage is absolutely for you. The question really is this: Do you want just liability coverage, or do you want additional types of coverage, too?

That depends:

·        If you're an otherwise healthy young adult on a tight budget, liability might be the best option for now.

·        If you have a really nice car that would significantly decrease in value due to damage, you might want additional collision insurance.

·        If you regularly drive around with young children or others who might be significantly hurt in an accident, you might want Personal Injury Protection.

There's a lot of insurance options out there. Instead of trying to navigate this world on your own, you'll likely find a better deal when you use a professional insurance comparison service such as ChimpQuote.

This expert platform lets you compare rates instantly from hundreds of major insurance companies. Figure out the absolute best deal on the insurance features you need instantly and easily.

Nobody wants to be in a car accident. But if an accident does occur, liability insurance makes sure you're legally protected from personal financial trouble.  

And that's something ALL drivers can agree on.