Liability Auto Insurance Coverage Facts Only

All states have a financial responsibility law

If you drive a vehicle, you are required to show proof that you have the financial ability to pay for damages if you are involved in a collision. This requirement applies whether or not you were at fault in an accident. If you fail to provide the required proof, you will be subject to certain penalties including suspension of your driver’s license or revocation of your vehicle registration.

The easiest and most cost-effective way to comply with the financial responsibility law is to purchase an automobile insurance policy.

Liability insurance coverage

The main component of an auto insurance policy is liability coverage that provides compliance with financial responsibility laws with state-defined liability limits. Liability insurance pays for bodily injury and property damage if you are at fault in an accident. Each state has set minimum limits for liability coverage. Those limits are:

State-by-state minimum requirements

*Alaskan 50/100/25
*Ala 20/40/10
*Arkansas 25/50/15
*Arizona 15/30/10
*California 15/30/5
*Colored 50/25/15
* Connecticut 20/40/10
*Delaware 15/30/5
*Florida 10/20/10
*Georgia 30/15/10
*Hawaii 20/40/10
*Idaho 20/50/15
*Ill. 40/20/15
*Indiana 25/50/10
*Iowa 20/40/15
*Kansas 50/25/10
*Kentucky 25/50/10
*Louisiana 10/20/10
* Maine 50/100/25
*MD 40/20/10
*Massachusetts 20/40/5
*Michigan 20/40/10
*Minnesota 30/60/10
*Mississippi 25/50/25
*Missouri 50/25/10
* Mountain 25/50/10
*Nebraska 25/50/25
*New Hampshire 25/50/25
* New Jersey 15/30/5
* New Mexico 25/50/10
* Snowfall 30/15/10
*New York 50/25/10
*North Carolina 30/60/25
*North Dakota 25/50/25
*Ohio 12.5/25/7.5
*Ok 10/20/10
*Oregon 25/50/10
* Pennsylvania 15/30/5
*Rhode Island 25/50/25
* South Carolina 25/50/25
* South Dakota 25/50/25
*Tennessee 25/50/10
* Texas 20/40/15
*Utah 25/65/15
*Virginia 25/50/20
*Vermont 25/50/10
* Washington 50/25/10
* Wisconsin 50/25/10
*West Virginia 40/20/10
*Wyoming 25/50/20

As you can see, liability coverage is expressed in three numbers. The first two numbers represent the policy limits for bodily injury. The first number is the amount of coverage available to pay for the medical expenses of the other person in the accident if you are at fault. The second number is the amount of coverage that is available to pay for the medical expenses of everyone else involved in an accident if you are at fault. The third number is the amount available to pay for property damage for everyone else involved.

Example: You’re driving down a residential street and you’re worried (lost in thought, on your cell phone, whatever) and you don’t see a stop sign. Another driver, who has the right of way, proceeds through the intersection at the same time. He is driving within the speed limit, but the other driver is waiting for him to stop. When you realize you are about to crash into another vehicle, you slam on the brakes, but your momentum carries you into the other vehicle.

Clearly, you caused the collision and your insurance company agrees. Your policy would pay the other driver’s medical expenses for injuries sustained in the accident up to the policy limit (first number). If the other driver also had passengers in the car, your policy would pay their medical expenses up to your policy limits (second number).

So for this example, if you are insured in Alaska, your insurance company would pay up to $50,000 for the driver’s medical expenses or up to $100,000 for the driver and passengers’ medical expenses.

Your insurer would also pay to repair the other driver’s vehicle up to the limit of your property damage coverage (third number).

If you are sued, it is the liability coverage in your policy that allows your insurance company to defend you in court. Having liability coverage protects your assets.

You should determine the appropriateness of a liability policy only

While a liability policy alone does much to protect you in terms of your liability to others, it does not repair or replace your property. A liability only policy does not pay for your medical expenses. It also doesn’t protect you if you’re damaged when you’re hit by an uninsured driver. A liability policy only needs to be updated with comprehensive and collision coverage when you trade in your paid-for vehicle for a new vehicle that you financed.

It is very difficult to have to tell an Insured with a liability only policy, whose car was totaled when it was hit while parked, that their policy does not cover them in those circumstances.

Finally, some advice that will not always be taken into account. If you can’t replace it the day after an event or can’t do without it, secure it properly.