What is liability auto insurance coverage?

Liability coverage pays for damage you cause to others. Liability-only auto insurance costs $43.03/mo on average. Lower your bill by comparing quotes.

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Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance...

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Reviewed byDaniel Walker
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UPDATED: Apr 22, 2020

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Things to Remember...

  • Liability auto insurance can keep a driver out of a financial mess but it never pays the driver anything financially
  • Generally, the lower a person pays for car insurance, the less coverage is provided. So be aware when researching different companies
  • Knowing exactly what you need helps you compare similar rates and get the best car insurance rate possible
  • Before committing to any policy, every consumer should perform at least one search on an insurance comparison site to see what alternatives are offered

While car insurance comes in varying sizes and amounts of coverage, there are distinct categories of insurance protection provided to consumers. The most basic of all is what is known as liability auto insurance.

Intended or designed to provide a basic financial net that restores an injured party in an automobile accident, liability auto insurance can keep a driver out of a financial mess but it never pays the driver anything financially.

This type of policy only pays out to bodily injury and property damage the driver causes other people as a result of his driving. So if the driver gets hurt or his own car gets damaged in the same accident, the driver’s costs are out-of-pocket entirely.

Saving money with car insurance can be frustrating. Compare quotes now by entering your ZIP code into our FREE auto insurance comparison tool!

All 50 states require drivers to have at least a basic auto liability policy in place before getting on the road in a vehicle. This requirement makes sure that when people do cause an accident, there is some ability to get the driver responsible to pay for the damage caused.

The insurance policy in place takes care of this problem by allowing injured parties to have their damages paid from the auto insurance company instead. In turn, the insurance company recoups its losses from the involved driver with higher premiums over time.

What’s included?

Liability coverage plans typically come split into three parts. Each one has a dollar limitation representing how much in total the insurance provider will financially cover in an accident and related event.

In policy terms, the three limits will look like numbers with slashes between, such as 10/20/20 or 15/30/20. The interpretation of a number set goes as follows:

  • $10,000 total for total bodily injury per person.
  • $20,000 for aggregate body injury per accident.
  • $20,000 for property loss or repair.

These amounts will vary from auto insurance company to company, however, most states have laws requiring minimum levels of coverage in any policy provided to a driver.

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Marketing

A number of car insurance companies will put out advertising saying they can provide car insurance at the lowest possible price ever.

Consumers really need to read between the lines when hearing these “promises.”

Because liability insurance minimum requirements can vary from state to state and company to company, what is offered will vary significantly as well.

Generally, the lower a person pays for car insurance, the less coverage is provided. Insurance companies aren’t in the business of charity.

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Understand What is Really Needed

The cost of liability insurance, even with state requirements can fluctuate a lot depending on how the covered car is used and where. By understanding these elements a consumer can lower his cost in terms of a lower premium.

Cars that are left out on the street in urban areas or that are driven in a commute everyday trigger higher costs. The logic is simple there’s a higher probability of an accident in a commute or city than driving on the weekend in the country.

Knowing exactly what you need helps you compare similar rates and get the best car insurance rate possible.

If a consumer just goes to an insurer and says I need a plan, the insurance provider will be inclined to sign the consumer up for the most expensive plan possible.

This is not necessary. Instead, the consumer should have a good idea of exactly the coverage needed ahead of time and then compare insurance costs offered by a variety of providers.

Financial Considerations

Nobody wants to pay more than they have to for an auto insurance company. Until it is necessary, car insurance frequently feels like handing good, hard-earned money away for nothing. However, when that car accident occurs, and it will, being financially covered will make a world of difference.

Without it, many people wouldn’t even be able to repair their own car much less someone else’s vehicle.

This makes such coverage affordable to even someone on minimum wage, but keep in mind the coverage included as very limited as well.

Because of these above facts, a consumer needs to think carefully about what he really wants from car insurance.

If driving a beater vehicle that is 12 years old, cost $2,000 used, and does just enough to get from point A to B, then a stripped-down liability plan is probably just right.

If the car is brand new and has another ten years of life in it, and it is also a critical vehicle for work, school, and living, paying a bit more for a more comprehensive plan is probably a better idea.

Consumers should also keep in mind medical coverage when budgeting costs. Liability plans only restore others hurt by a driver.

If a driver doesn’t have his own health coverage from an employer, getting hurt in an accident could mean relying on minimal services in an emergency room for any care.

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No Surprises

Anybody shopping for car insurance realizes soon enough that information is hard to find by phone or talking to sales agents.

Neither method is very good for figuring out which basic auto liability plan or any other auto insurance plan offered is the better option.

With the Internet, a larger window of information is now available to compare insurance companies with.

Internet comparison sites can now provide detailed immediate quotes for consumers based on the car type, liability plan desired, location, driver’s experience or age.

Most sites provide at least five comparisons per search if not more.  Some sites even provide discounts or coupons for lower initial rates for going through a particular site to connect to an affiliated insurance provider.

Before committing to any policy, every consumer should perform at least one search on an insurance comparison site to see what alternatives are offered.

Our FREE comparison tool will compare rates for you right away! If nothing else, the information can even help negotiate a lower price with an already-chosen provider via email through the site.

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