What Is Automobile Liability Insurance?

By Jeri McBryde , last updated January 9, 2012

If you drive a car on the roads and highways of America, you need automobile liability insurance to protect others for any damage you cause to their vehicle or property. In fact, out of the fifty states and the District of Columbia, New Hampshire is the only state that does not require automobile liability insurance. However, New Hampshire does have financial-responsibility laws that require you to prove through a bond or other means that you have sufficient assets to pay for any liability that is your fault in an accident. Automobile Liability Insurance is the most popular form of insurance, probably because it’s illegal to drive without it.

What Liability Insurance Covers

Liability insurance covers the costs of damage you inflict on other people. It does not cover any injury to you or your vehicle. Liability insurance will help protect you from personal financial ruin. The coverage also extends from your insured vehicle to any vehicle or trailers you may be towing. The coverage also insures relatives or friends who drive your car with your permission and hit someone.

Understanding the Combinations of Liability Insurance

Liability insurance comes in different combinations. Each state regulates the minimum coverage allowed. For example, a policy with limits of $25,000 / $50,000 / $25,000 is one of the lowest allowed. The coverage comes in three portions.

The first amount or portion, in this case $25,000, is Bodily-injury liability coverage. If you are at fault and the other party incurs injuries or death, the liability insurance will pay for legal, first aid, medical expenses, loss of wages, bail bond, and attorney’s fees until the coverage amount of $25,000 is met. Pain and suffering also falls under this coverage. The bodily injury liability insurance will not cover you or other people on your policy. The middle portion of the policy is the financial protection you have if one or more people are injured or killed in the accident. The last figure or portion is the total amount of coverage that will be paid out for all the property damage you caused in the accident. Property damage is not always done to a vehicle. It can also be a storefront, house, mailbox or fence. The repair or replacement of parked cars is also covered if you are at fault.

Choosing Lower Versus Higher Premiums

While the state liability limits may have a lower premium, keep in mind that you want to be protected. The state property minimum will not cover a new vehicle if you have the misfortune to hit one and medical costs are rising daily. The injured parties have the right to sue you in court. If your insurance coverage is insufficient, you are personally responsible. You do not want to put yourself at risk. Always choose the highest coverage you can. The higher the deductible you choose, the lower the premium.

Go Over Your Policy with an Insurance Professional

Always go over your auto insurance policy with an insurance professional, even if you only want liability insurance. If you are financially unable, your agent will be able to explain the coverages and help you choose the limits that are best for your needs and that you can afford. Compare premiums and coverage, be a responsible driver and be prepared for any unfortunate incidents.

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