Need Liability Car Insurance? Here’s What’s Special Covered and How Much You’ll Need

Liability car insurance is all about covering injuries and damages that happen to others due to your actions or the actions of someone you’ve permitted to drive your vehicle. However, it doesn’t extend to injuries to yourself or damages to your own property or vehicle.

Since auto liability insurance focuses on protecting others from any damages you might cause, it’s mandated by law. But there are exceptions, as drivers in Virginia, New Hampshire, and rural parts of Alaska may choose not to have this type of insurance. Essentially, your liability insurance policy is broken down into two main components, each carrying its state-required minimums. When you’re at fault in an accident:

Is liability car insurance mandatory?

Yes, it’s obligatory in every state, except for Virginia, where a $500 annual fee is an alternative; Alaska, for drivers in rural villages not requiring auto registration; and New Hampshire, where cash deposits meeting liability coverage limits can replace insurance. However, uninsured motorists remain legally accountable for accidents they cause.

Not meeting the minimum auto liability coverage in most states could lead to fines, the suspension of your license and car registration, or even imprisonment.

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How much liability insurance do I need?

Determining the right amount of liability insurance depends on your individual situation, such as:

  • Your state’s minimum coverage demands.
  • Your net worth, or the potential loss in a lawsuit if found at fault.
  • Your purchased coverage limit, beyond which you could be sued personally.

Consider your assets when choosing the right amount of car insurance. States set varied minimum required coverage amounts on liability policies, ranging from $10,000 to $50,000 for bodily injury liability coverage per person and $5,000 to $25,000 for property damage liability per accident.

The most commonly mandated liability limits are 25/50/25, but experts often advise higher limits like 100/300/100. Insurance will cover up to the limit, with anything beyond being your responsibility.

What does it mean if the coverage limits are $250,000/$500,000?

This figure refers to liability insurance with limits of up to $250,000 for individual bodily injury and $500,000 for multiple people’s injuries per accident.

What is the 50-100-50 rule for liability insurance?

The “50-100-50” expression relates to liability coverage limits of $50,000 per individual for bodily injury, $100,000 per accident for multiple injuries, and $50,000 for property damage.

What is the difference between full coverage and liability car insurance?

Full coverage, unlike comprehensive coverage, includes all three major types of auto insurance:

  • Liability auto insurance, for others’ injuries and property damage.
  • Collision auto insurance, for your vehicle’s damages in a traffic accident.
  • Comprehensive auto insurance, for damages to your car from non-traffic events like hail or theft.

How much less is liability vs. full coverage?

Liability insurance typically costs half as much as full coverage. In 2020, the average national cost was $631 per year for liability, varying by state and other factors, compared to $1,176 for full coverage, which also includes comprehensive at $174 and collision at $371.

Is it smart to just have liability insurance?

If your vehicle is paid off, carrying only liability insurance may be wise, especially for older or less valuable cars. However, consider purchasing collision and comprehensive coverage if you can’t afford to replace your car or if your annual premium reaches 10% of the car’s value.

Is there a deductible for liability car insurance?

Liability insurance doesn’t include a deductible, but the rate is determined by factors like your driving record, age, gender, ZIP code, car model, and annual mileage. You can reduce your premium by opting for lower coverage levels, but weigh the potential consequences and peace of mind that come with maintaining adequate coverage.