Automobile insurance covers you and your car in the event of an accident, theft, vandalism, or damage caused by a natural catastrophe. Personal liability coverage in your insurance covers you if you’re found to be at fault in an accident that injures or damages someone else’s property. With the exception of New Hampshire, every state requires you to acquire a minimum amount of liability coverage when insuring a vehicle.
What Is Personal Liability Insurance?
Car insurance policy can include a variety of coverage options, including:
- Bodily injury liability
- Property damage liability
- Personal injury protection (in certain states)
- Collision coverage
- Comprehensive coverage
- Uninsured/underinsured motorist coverage
The policy’s liability coverage is represented by the first two items on that list: bodily injury and property damage.
If you’re at fault in an accident, bodily injury liability coverage, or BI, covers physical injuries to another person. So, if you rear-end someone with your automobile and they have neck and back discomfort that necessitates an X-ray or continuous therapy, your bodily injury liability policy may cover some or all of those expenses, depending on your coverage levels.
If you’re at fault in an accident, property damage liability coverage, or PD, provides for compensation to someone else’s property. This insurance can cover another person’s car as well as other property, such as fences or structures. This sort of liability insurance supports the expense of fixing the harm in part or in full.
Personal Liability Insurance Limits
Except for New Hampshire, every state has a minimum level of personal liability insurance that drivers must carry. You may notice three distinct liability limits on your policy, dependent on your state’s requirements:
- Bodily injury liability limit per person
- Bodily injury liability limit per accident
- Property damage liability limit
Bodily injury liability limit per person
If you’re at fault in an accident, the bodily injury liability limit per person is the maximum amount your automobile insurance carrier will pay toward someone else’s medical expenses. For example, if an accident results in physical injuries to another person, you may be covered up to $25,000 per person.
Bodily injury liability limit per accident
The maximum amount your insurance carrier will pay toward medical expenses for a single event is the bodily injury liability limit per accident. Assume you have a $50,000 bodily injury liability limit per accident. Regardless of how many people were hurt in the accident, it is the maximum amount your insurance will cover for medical expenses.
Property damage liability limit
If you’re at fault in an accident, your property damage liability limit is the maximum amount your insurer will pay for property damage. If your policy includes all three types of liability insurance, these figures are usually written in abbreviated form. If you’ve a $100,000 bodily injury liability limit per person, a $300,000 bodily injury liability limit per accident, and a $50,000 property damage liability limit, your policy can be labeled 100/300/50.
Why Do You Need Personal Liability Insurance?
Personal liability insurance is intended to safeguard you against significant financial losses resulting from an accident that you caused. If you’re in an accident and injure someone, you’ll be responsible for paying the $50,000 medical bill out of pocket if you don’t have bodily injury liability coverage. If you can’t come up with the money, you may be sued in court.
Other insurance coverages in your policy serve different objectives. Collision coverage, for example, compensates you for damage to your vehicle as a result of an accident. Damages that aren’t absolutely accident-related, such as those caused by falling objects, are covered by comprehensive coverage. Medical payments coverage, on the other hand, would cover your own medical expenditures if you were injured in an accident.
How Much Personal Liability Insurance Should You Buy?
Your liability coverage must, at the very least, fulfill the state’s requirements. The cost of this insurance will be determined by a number of criteria, including the policy’s coverage limits and your driving history.
The minimum coverage criteria in several states is 25/50/25, which means:
- $25,000 bodily injury liability limit per person
- $50,000 bodily injury liability limit per accident
- $25,000 property damage liability limit
However, whether those limits are adequate depends on a variety of factors, including your financial means.
Assume you’re involved in an accident that results in three persons being injured. Their medical bills total $75,000 in total. If your bodily injury liability limit is $50,000 per accident, you’ll have to come up with the remaining $25,000 to cover their medical expenses.
Having additional personal liability insurance coverage can help you avoid having to pay huge sums of money out of pocket following an accident. However, keep in mind that raising your coverage limits will raise your premiums. Your insurance agent may be able to assist you if you’re unsure how much personal liability insurance to get.