Understanding Liability Auto Insurance

By Author: Marcus Stalder
Total Articles: 491
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In this day and age, the economy is tight and it is getting more and more expensive to drive a car. Driving to work is a necessity of life for millions of Americans, and this cost of life has risen significantly with rising taxes and fuel costs. Now, auto insurance is an additional cost to driving and with competition in the insurance industry at an all time high, auto insurance is getting more expensive as well. You can not drive a car in America without auto insurance, but you do not need every bell and insurance whistle.
To legally drive in the United States, the minimum requirement is liability insurance. Here we will look at liability insurance in more detail, and how knowing this can save you on your auto insurance.

Before you go quote shopping, know what you need before hand. All states in the U.S. require at least liability auto insurance, but in some states, that is all you need. Other states may also have collision and/or comprehensive requirements, but if you don't think you need those coverages, and your State doesn't require them, you can save money by only buying the auto insurance policy you need. ...
... You will need mandatory liability insurance however, and here's why.

Liability insurance is the insurance that protects third parties in the event of an accident. So, in the insurance business, you are the first party, the insurance company is the second party, and any person you have a collision with will be the third party under liability terms. Thus, liability insurance is also often called third party insurance. In the event of an accident for which you are at fault, liability insurance covers all damages and injuries to the third party. The reason for this is that legally speaking, the person found at fault for the accident is responsible for all damages and injuries to the third party. But if you have liability insurance, your insurance company will pay for those damages. That is exactly the point of liability insurance. It protects you the driver from being financially responsible for a collision, even when you are found at fault.

Many people wonder what liability auto insurance covers, and this is a valid question. If you have to pay for it, you want to know what you are paying for. There are two types of liability insurance coverages, and these are known as bodily injury liability, and property damage liability. Your insurance policy will have a set amount allotted to each type of liability coverage, for example $100,000. So if you are in an accident, your insurance company will pay for damages up to $100,000 for property or vehicle damages to the other driver. The same idea will be the case for bodily injury damages, where your insurance company will pay up to a certain amount for any medical expenses or loss of wages due to accident that are incurred by the third party. In most auto insurance policies, two amounts are given for your liability coverage, one for bodily injury and one for property damage.

If you are looking to lower your auto insurance quotes however, you can still do so with liability auto insurance. Just because you are required to have it, does not mean you can't tweak your policy in order to lower your costs. Many insurance companies today will allow you to have a deductible amount on your liability insurance, and this is an amount you agree to be out of pocket yourself in the event of a collision for which you are at fault. Having a deductible on your policy will be one way to lower your auto insurance quotes and give you one less expense for driving in today's economy.