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Liability Car Insurance

Illustration of Liability Car Insurance

What is Liability Car Insurance?

Liability car insurance protects you against bodily injury and property damage claims when you are involved in a car accident.

Suppose you are found partially or fully at-fault for an accident. In that case, your insurance provider will pay an amount within the coverage limits of your policy to cover medical and repair expenses for those claims. In cases where the claim exceeds your limit, you are responsible for paying the remainder. Liability insurance is for paying other people’s damages and injuries, not your own.

Liability car insurance, or just liability-only insurance, is the basic car insurance required for driving legally in practically every state. Although, minimum limits vary from state to state, and some states do require other coverages.

How Do I Know Who is at Fault in a Car Accident?

Three authorities typically weigh in on who’s at-fault for a car accident, the police at the scene of the accident, insurance adjusters, and the courts. The courts have the final say if it goes that far, but typically the driver’s insurance company has clear rules to follow in determining fault, and many accidents are not elevated to the courts. Allowing your policy provider to handle claims will help expedite the recovery process. But, you do have the right to continue to pursue remunerations if you think that fault was misattributed.

Suppose an accident is serious enough or a police officer is around to witness it. In that case, they are required to submit a police report of their findings, including interviews with the drivers and witnesses. Their report may include a statement about who is at fault, but it’s not necessary. Even if there is a determination of fault on the police report, a subsequent lawsuit in the courts may come to a different conclusion.

When an insurance company receives a claim, they assign it to an adjuster to investigate the accident and resolve the insurance claim’s settlement. Usually, insurance companies of both drivers will appoint their own adjuster. The adjusters examine medical reports, damaged vehicles, witness testimonies, and determine who is at fault by following the legal definition of negligence in the state where the accident occurred. The case will typically end here because adjusters follow strict guidelines in determining fault and many accidents are minor fender benders. More severe accidents may require deep investigation and involve the courts.

After the adjusters deliberate on fault, and if you are unsatisfied, you can file a lawsuit seeking a different outcome. The courts have the final say in who is at fault in a car accident based on the laws of negligence. At this stage, the courts can review all evidence, from police reports to the insurance adjuster’s conclusions. Although police reports are often considered hearsay, the courts will also be able to review traffic violations. This could work for you. A term called negligence per se; a traffic violation could sway the judge in determining who was at fault. If the defendant were ticketed for running a red light that contributed to the accident, negligence per se would eliminate the “duty” of the plaintiff to prove negligence.

Understanding How Fault is Determined in Your State

The legal nuances that determine whether you are at fault are based primarily on your state’s laws defining negligence and fault. There are three main categories, a pure contributory negligence state, a pure comparative fault state, or a modified comparative fault state. Defining these systems of measuring fault will give you an idea of what to expect if you are in an accident; however, it is always advisable to seek counsel or talk to your insurance provider in these matters.

  • Pure Contributory Negligence — If you are found at fault, even in the slightest, even 1%, you cannot recover any damages as a plaintiff.
  • Pure Comparative Fault — This system allows a damaged party to recover a reduced amount based on their degree of fault, even if it’s 99% at-fault.
  • Modified Comparative Fault — Of the 33 states that follow the modified comparative fault, 12 states use the 50% bar rule, while the remaining 21use the 51% bar rule. In the first, damaged parties cannot recover if they are 50% at-fault. In the second, they cannot recover if they are 51% at-fault. The main difference is that 1%, but it’s a lot. By the 50% bar rule, if two damaged parties were found to be equally at-fault, 50/50, neither could recover from the other. However, by the 51% bar rule, the party who is more negligent than the other, 51% or more, should not be able to recover; however, the other party can.

The table below outlines which states follow which fault system.

Fault System States States
Pure Contributory Negligence Alabama, District of Columbia, Maryland, North Carolina, and Virginia
Pure Comparative Fault Alaska, Arizona, California, Florida, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, New York, Rhode Island, South Dakota, and Washington
Modified Comparative Fault (50% Rule) Arkansas, Colorado, Georgia, Idaho, Kansas, Maine, Nebraska, North Dakota, South Carolina, Tennessee, Utah, and West Virginia
Modified Comparative Fault (51% Rule) Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Vermont, Wisconsin, and Wyoming

What Does Auto Liability Insurance Cover?

Auto insurance can cover a wide range of situations with many optional coverages for particular circumstances. Learn more about the types of car insurance coverages that are available.

The typical driver will have the following liability coverages simply because they are mandatory in most states. Considering the destructive potential of car accidents, it’s easy to see why liability insurance is mandatory:

  • Property Damage Liability Coverage – If you damage someone’s car or property, like a fence, you are considered liable for those damages. Liability coverage will pay out an amount up to what is stipulated in the policy to cover property repairs for others.
  • Bodily Injury Liability Coverage – If you injure someone, you are considered liable for their injuries. Liability coverage will pay out an amount up to what is stipulated in the policy to cover medical expenses for others.

Mandatory requirements only cover injuries and property damages sustained by others, not the policyholder. The Law says that all drivers are liable for the damages they cause to anyone and anything around them. Driving is a privilege that makes the driver accountable.

What Does Liability Car Insurance Not Cover?

When it comes to a policyholder’s health and property, the Law is more lenient. The following coverages help protect the policyholder’s health and property, coverages that may not be mandatory in your state.

  • Collision Insurance Coverage — If you’re driving and your car is in an accident, collision insurance will cover the repairs to your vehicle, regardless of who is at fault. Back up into a dumpster, this will help you fix your bumper.
  • Comprehensive Car Insurance Coverage — If your car is damaged from non-accident-related causes like a tree falls on it, hail damages it, rioters vandalize it, or someone steals it, comprehensive coverage will pay for repairs.
  • Medical Payments (MedPay) Coverage / Personal Injury Protection (PIP) — Auto MedPay and PIP covers medical expenses and sometimes funeral expenses following a car accident and can cover the driver, family, and additional drivers.
  • Uninsured/Underinsured Motorist — Underinsured motorist coverage is for the cases when you’re in an accident and the at-fault driver has the bare-minimum mandatory insurance. That minimum is insufficient to cover repairs to your car. This coverage is usually an inexpensive add-on to a base policy, and in a few states, it’s required.

Advice Point: Because it is minimally required and the premiums may be less, it is tempting to only insure for property and bodily injury liability coverage and not protect yourself with comprehensive and collision coverage. However, seriously consider your circumstance if you were in an accident and your car was totaled. Would you have enough financial savings to cover your own injuries and damages and purchase a new car? Do you have primary medical insurance? Will you have to stop working? Knowing the answers to these few questions will go a long way in bringing perspective to just how important car insurance coverage is.

Breaking Down Liability Car Insurance Limits

Coverages pay you out for damages or injuries that fall under those coverages, but they don’t necessarily cover the full amount of damages. The total coverage is called the coverage limit. The greater the coverage limit, the more premium you’ll wind up paying, but the more protected you will be. This makes it easy to compare coverages and premiums across policies. If you pay more in premiums for less coverage than an alternative insurance provider, you should shop around more for better coverage and cheaper rates.

Policies can be categorized as per-occurrence limit or split limit policies. What most people are familiar with are split limit policies. These policies can be beneficially lower in cost due to how the policy treats the separation of damages and injury payouts. Per-occurrence policies, or combined single limit coverage, is a single payment limit for the occurrence of an accident covering combined medical and repair bills.

Car insurance policies give their split coverage limits as a string of numbers separated by a slash and will look similar to 25/50/25 or $25,000/$50,000/$25,000.

These numbers breakdown into the policy limits, as so:

  1. $25,000 of coverage for bodily injury (per person)
  2. $50,000 of coverage for bodily injury (per accident)
  3. $25,000 of coverage for property damage (per accident)

Using the above limits, if you were in an accident and found liable, your insurance would cover the other people in the car accident up to a total amount of $50,000 for injuries and up to $25,000 for damages to their car. Each injured person would have up to $25,000 medical expense coverage, and anything exceeding that would need to come out of your pocket.

To illustrate, you are in an accident and insured with the above split coverage amounts. The total injuries are $55,000, while damages come up to $20,000, a total claim of $75,000. The medical expenses exceed the $50,000 total bodily injury coverage for the accident, which means that at least $5,000 would need to be paid out-of-pocket.

However, digging deeper, we find that the driver actually sustained $45,000 worth of injuries and the passenger only $10,000. You’re only covered up to $25,000 per person, per accident, which means you actually must pay $20,000 out-of-pocket to cover the remainder of the driver’s medical expenses. Had you had a combined single limit coverage of $100,000, all would have been covered. But it’s for that exact reason that combined single limit coverage can have higher premiums because of the likelihood that an insurance provider will need to pay out more for the same accident.

How Much Auto Liability Coverage Should You Have?

The short answer is the minimum amount that is legally required in your state plus some more coverage.

The wise answer is enough coverage to protect you from paying expenses out-of-pocket.

The essential idea to remember is that insurance is protection in cases of mishaps. The premium that you pay, either low or high, is the cost of that protection. For many policyholders, premiums paid are significant expenses, but an accident’s cost is unknown, which is sometimes difficult to imagine. Or is it?

Because you are liable for everything above what your insurance covers, the risk of the unknown is exactly equal to what you have in your bank account. And in the worst situations, bankruptcy. In the above coverage breakdown example, which is the minimum required coverage in many states, the insured must pay $20,000 out-of-pocket. Risk-avoiding drivers will immediately recognize that state minimum coverage is actually relatively low. So low, in fact, that it may leave you underinsured.

So, when deciding on your coverage amount, you choose how much to protect your finances and assets. Think of it as a protective moat between your money and any claims against you—the greater the coverage, the wider the moat. Asking yourself questions about the risks you are taking, and answering honestly, can help you determine your coverage amount balanced by the premiums you’ll pay.

  • How much savings do I have?
  • How much are my assets worth, like my house?
  • If I only have minimum car insurance, is that enough to protect my savings and assets?
  • If I’m injured in an accident and unable to work, how much savings do I have to sustain my lifestyle after paying any out-of-pocket expenses for the accident and my own medical bills?

For many drivers, the balance between total coverage amount and premiums will continue to upset them. On the one hand, premiums can be an annoying monthly expense, but on the other hand, driving uninsured or with minimal insurance can leave you financially stranded. For drivers with little savings, an accident can be a serious financial setback.

Louisiana’s minimum bodily injury requirement is $15,000. Compared to hospital expenses, like hospital stay per night of $1,500-$3,500 and more for ICU stays, could reveal how basic coverage is inadequate for most drivers. All it would take is a semi-serious car accident to deplete your coverage limit and put your finances at risk.

A final thought, if doubling your coverage only costs you a little more in monthly premiums, it might be wise for you to go with more coverage.

Does My Liability Car Insurance Cover Me or Just My Car?

This is a common question, when does your insurance specifically cover you? Is your car covered when someone else is driving it? Are you covered if you are driving a vehicle that is not yours? As with all things insurance-related, your policy is the ultimate source of coverage specifics. However, insurance commonly follows both you and your car in certain situations. Let’s answer the questions.

Is Your Car Covered When Someone Else is Driving it?

The deciding factor here, beyond your insurance policy, is whether the person driving your car is a permissible or non-permissible driver. As it might sound, if you permitted the driver to use your vehicle, then they are protected by your liability and collision coverage, which is known as the primary insurance on the car. If a driver is not permitted to use your vehicle but does anyways, your car is not protected by your insurance.

There are some exceptions. If you permit a non-licensed driver to drive your car or drive under the influence of drugs or alcohol, it’s highly likely your insurance will not cover them. It is also challenging to prove a driver did not have permission, especially if they are family. In these cases, you can amend your policy with an excluded drivers list which explicitly states those who do not have permission to drive your car.

Am I Covered When Driving a Car That is Not Mine?

Certain coverages can protect you while you’re driving someone else’s car. In this case, the primary insurance remains the owner’s insurance, and your insurance will act as backup insurance or secondary insurance. Suppose you happen to cause an accident with damage exceeding the primary insurance limit. In that case, your insurance, the secondary insurance, will kick in to cover the rest or what it can.

This raises an interesting point. If you loan your car out, say to your visiting family member, and they do not have insurance but cause an accident that exceeds your insurance limit, then you could be held liable for the remaining damages.

Minimum Liability Requirements by State

BI = Bodily Injury, PD = Property Damage, UIM = Uninsured Motorist, PIP = Personal Injury Protection

State BI PD UIM BI UIM PD PIP
Alabama $25,000 per person/ $50,000 per accident $25,000 per accident
Alaska $50,000 per person/ $100,000 per accident $25,000 per accident
Arizona $25,000 per person/ $50,000 per accident $15,000 per accident
Arkansas $25,000 per person/ $50,000 per accident $25,000 per accident
California $15,000 per person/ $30,000 per accident $5,000 per accident
Colorado $25,000 per person/ $50,000 per accident $15,000 per accident
Connecticut $25,000 per person/ $50,000 per accident $25,000 per accident $25,000 per person/ $50,000 per accident
Delaware $25,000 per person/ $50,000 per accident $10,000 per accident $15,000 per person/ $30,000 per accident
Florida $10,000 per accident $10,000
Georgia $25,000 per person/ $50,000 per accident $25,000 per accident
Hawaii $20,000 per person/ $40,000 per accident $10,000 per accident $10,000
Idaho $25,000 per person/ $50,000 per accident $15,000 per accident
Illinois $25,000 per person/ $50,000 per accident $20,000 per accident $25,000 per person/ $50,000 per accident
Indiana $25,000 per person/ $50,000 per accident $25,000 per accident
Iowa $20,000 per person/ $40,000 per accident $15,000 per accident
Kansas $25,000 per person/ $50,000 per accident $25,000 per accident $25,000 per person/ $50,000 per accident $4,500*
Kentucky $25,000 per person/ $50,000 per accident $25,000 per accident $10,000
Louisiana $15,000 per person/ $30,000 per accident $25,000 per accident
Maine $50,000 per person/ $100,000 per accident $25,000 per accident $50,000 per person/ $100,000 per accident $2,000**
Maryland $30,000 per person/ $60,000 per accident $15,000 per accident $30,000 per person/ $60,000 per accident $15,000
Massachusetts $20,000 per person/ $40,000 per accident $5,000 per accident $20,000 per person/ $40,000 per accident $8,000
Michigan $50,000 per person/ $100,000 per accident $10,000 per accident $250,000 for those with qualified health coverage
Minnesota $30,000 per person/ $60,000 per accident $10,000 per accident $25,000 per person/ $50,000 per accident $40,000
Mississippi $25,000 per person/ $50,000 per accident $25,000 per accident
Missouri $25,000 per person/ $50,000 per accident $10,000 per accident $25,000 per person/ $50,000 per accident
Montana $25,000 per person/ $50,000 per accident $20,000 per accident
Nebraska $25,000 per person/ $50,000 per accident $25,000 per accident $25,000 per person/ $50,000 per accident
Nevada $25,000 per person/ $50,000 per accident $20,000 per accident
New Hampshire $25,000 per person/ $50,000 per accident $25,000 per accident $25,000 per person/ $50,000 per accident $25,000 per accident $1,000**
New Jersey $15,000 per person/ $30,000 per accident $5,000 per accident $15,000 per person/ $30,000 per accident $15,000
New Mexico $25,000 per person/ $50,000 per accident $10,000 per accident
New York $25,000 per person/ $50,000 per accident $10,000 per accident $25,000 per person/ $50,000 per accident $50,000
North Carolina $30,000 per person/ $60,000 per accident $25,000 per accident $30,000 per person/ $60,000 per accident $25,000
North Dakota $25,000 per person/ $50,000 per accident $25,000 per accident $25,000 per person/ $50,000 per accident $30,000
Ohio $25,000 per person/ $50,000 per accident $25,000 per accident
Oklahoma $25,000 per person/ $50,000 per accident $25,000 per accident
Oregon $25,000 per person/ $50,000 per accident $20,000 per accident $25,000 per person/ $50,000 per accident $15,000
Pennsylvania $15,000 per person/ $30,000 per accident $5,000 per accident $5,000**
Rhode Island $25,000 per person/ $50,000 per accident $25,000 per accident
South Carolina $25,000 per person/ $50,000 per accident $25,000 per accident $25,000 per person/ $50,000 per accident $25,000 per accident
South Dakota $25,000 per person/ $50,000 per accident $25,000 per accident $25,000 per person/ $50,000 per accident
Tennessee $25,000 per person/ $50,000 per accident $15,000 per accident
Texas $30,000 per person/ $60,000 per accident $25,000 per accident
Utah $25,000 per person/ $65,000 per accident $15,000 per accident $3,000
Vermont $25,000 per person/ $50,000 per accident $10,000 per accident $50,000 per person/ $100,000 per accident $10,000 per accident
Virginia $25,000 per person/ $50,000 per accident $20,000 per accident $25,000 per person/ $50,000 per accident $20,000
Washington $25,000 per person/ $50,000 per accident $10,000 per accident
Washington D.C. $25,000 per person/ $50,000 per accident $10,000 per accident $25,000 per person/ $50,000 per accident $5,000 per accident
West Virginia $25,000 per person/ $50,000 per accident $25,000 per accident $25,000 per person/ $50,000 per accident $25,000 per accident
Wisconsin $25,000 per person/ $50,000 per accident $10,000 per accident $25,000 per person/ $50,000 per accident
Wyoming $25,000 per person/ $50,000 per accident $20,000 per accident

Get a Custom Liability Car Insurance Quote Today!

Liability insurance is essential for any driver and it doesn’t have to be complicated. Freeway Insurance can help you get covered with an online quote, a quick phone call at (800) 777-5620, or a helpful visit to an office near you.


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