Car insurance basics - Liability coverage

If you have just purchased a car or truck, or if you haven’t purchased one in a while, you may find that you need to buy car insurance. That’s not a problem; there are many people who will sell it to you. But what do you need? How much? Like any business, the insurance industry has its own terminology, and if you aren’t familiar with it, you can get confused in a hurry. Being confused is the last thing you want when you are making as important a purchase as auto coverage.

Here is some basic information about the most important aspect of coverage - liability insurance.. This will give you a good foundation for when you start discussing your policy with an agent or look for an insurance quote.

Liability insurance - This is the most basic of all insurance terms. Liability insurance is the policy that makes sure that you can pay for any damage to people or property in an accident caused by you. Most (45 at last count) states require liability insurance, but you should have it whether it is required or not. If you are not covered and you cause damage or bodily harm in an accident, you can be sued in a court of law. That lawsuit could cost you virtually everything you own, so it’s far better to be safe than sorry. 

Liability coverage requirements vary from state to state, but the requirements usually stipulate minimum amounts that must be carried in three different areas -Bodily injury coverage per person, total bodily injury coverage per accident, and total property damage coverage per accident. These numbers are usually expressed in thousands of dollars, and abbreviated like this: 20/50/20. That would represent $20,000 worth of per-person bodily injury coverage, $50,000 worth of total bodily injury coveraget, and $20,000 worth of property damage per accident. Each state has its own requirements; your agent will inform you as to how much you should buy.

While it is essential that you have the minimum amount of required liability coverage, it is far wiser to purchase more than the minimum. It doesn’t necessarily cost that much more to buy extra coverage, but it can cost you a fortune if you are sued and don’t have enough money to pay a court judgment. Such a court ruling could cost you your home, your savings, and anything else you might have. When shopping for insurance, make sure you inquire about buying enough to make certain that your coverage is adequate for your needs.

Liability is just the most basic of insurance coverage. In addition to liability, you may also need comprehensive, uninsured motorist and possibly personal injury protection (PIP), and collision coverage. Those are complicated topics that cannot be dismissed in a paragraph or two. They will be discussed on another page, in greater detail..

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