Auto Insurance Liability: What You Need to Know

Many Americans are putting themselves and their families at risk by driving around without adequate liability coverage. To make matters worse, many of these drivers think that they are paying for adequate coverage when they are not getting it.


The reason these people are not getting the insurance coverage they should be paying for is that they do not understand liability. In simple terms, liability means the amount that you can be sued for after an accident. Unfortunately, most people can be sued for far more than they might realize.

Here are few facts about liability that you need to be aware of:

  • Most states have what is called at-fault auto insurance. That means the individual considered responsible for the accident is financially liable for all the damage done. You can be sued for the damage.


  • In most states, an uninsured motorist can sue you for damages after an accident. Not having insurance does not prevent a person from suing.


  • Even in states with so-called no fault insurance, you might still be liable for some damages.


  • The biggest liability in an accident is bodily injury liability. That means paying the medical bills of those who are hurt and for any other damages allowed under state law.


  • Bodily injury liability is the reason why auto insurance premiums are very high in a number of states, including Michigan and Louisiana.


  • Persons without health insurance are more likely to sue because such a settlement might be the only way that they can pay their medical bills.


  • Even in states with limits on liability, the costs can still add up quickly. Most states limit liability to around $100,000, or $50,000 a person. Unless you are a millionaire, you probably don’t have that kind of money lying around. That means one accident is enough to bankrupt the average family.


  • Simply getting one bodily injury liability claim on your record can double or triple your insurance premiums.


How to Make Sure You Have Adequate Liability Coverage

Ensuring that you have adequate liability coverage is very easy. All you have to do is read the insurance policy. Don’t take the word of an agent or insurance salesman. Contrary to popular belief, a lot of insurance agents don’t really understand the product that they are selling.

Make sure that the policy provides bodily injury coverage and uninsured motorists’ coverage. A good rule of thumb is that a policy should provide $50,000 in bodily injury coverage per person and at least $100,000 worth of bodily injury coverage.

Something to remember is that not every state requires uninsured motorists’ coverage. Make sure you have it because uninsured motorists are often more likely to sue after an accident; that is the only way that they can get their medical bills paid. Uninsured motorists are also more likely to be broke or out of work, which gives them a strong incentive to run to a personal injury attorney.

There are also some policies that only cover one vehicle. They are called unstacked policies, which unfortunately are only sold in one state.

Another good rule of thumb to keep in mind is that you get what you pay for. If you see an incredibly cheap auto insurance policy, get suspicious of it. Bodily injury liability is the most expensive part of auto insurance.

The bottom line is that it always pays to read auto insurance policy. It may not be the most interesting read, but taking a look at your car insurance can save you a lot of money, as well as a lot of grief.