How do I Know What my Auto Liability Insurance Covers?

If you’re a car owner, chances are you understand the importance of having auto insurance. Among the various risks and uncertainties that come with owning a vehicle, one of the most crucial aspects your insurance policy covers is liability. In the event that you are deemed liable for an accident, liability insurance covers financial responsibility for any property damage or bodily injury resulting from the operation of your vehicle.

In this article, we will delve deeper into the significance of auto liability insurance and how it safeguards you against potential financial burdens. Read on to explore why liability insurance coverage is vital for every responsible driver on the road.

Auto Liability Insurance Covers Your Financial Responsibilities in an Accident

Take a look at your insurance policy. On the very first page (called the Declarations Page) you will see amounts listed for bodily injury per person, bodily injury per accident, and property damage per accident. These limits may read something like 250/500/250. This means that if you cause an accident and are found liable, your insurance will provide up to $250,000 to pay for bodily injury to any one occupant in the other vehicle, up to $500,000 as a total bodily injury limit for all occupants in the other vehicle, and a separate $250,000 to pay for property damage (damage to the other vehicle).

Keep in mind: these are liability payments, meaning this amount does not factor any payments in for your medical bills or damage to your vehicle. In an unexpected accident, umbrella coverage can be a safety net to cover extra costs.

The limits mentioned above may sound like a large amount. If you consider yourself a good driver, you may think you could never cause such an accident. But let’s consider, for instance, how large a medical claim can actually be. According to Forbes, the average claim for bodily injury after a collision was $20,235 in 2020. Now factor in inflation and what could happen in a more serious accident. The American bankruptcy Institute reports that medical debts are the number one cause of bankruptcy.

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What kind of limits should I Purchase?

Certain states have enacted state minimum liability limits, or the bare minimum a person is required to carry. In Ohio the required minimum for bodily injury liability coverage is currently $25,000 per person injured in any one accident and $50,000 for all persons injured in any one accident.

However, this may not be enough insurance for an accident. Let’s say you accidentally cut someone off in traffic and you injure three people in that vehicle whose medical bills total $500,000. What will happen if you carry only state minimum limits? Your insurance will only pay up to $50,000 (the total bodily injury limit for all injured passengers). Then YOU will be responsible for paying the rest of the bills. If you don’t have $450,000 in cash lying around, the courts could garnish your wages or your assets may be seized.

Don’t skimp on auto insurance; a small investment now can save you from significant financial distress in the future. By prioritizing higher coverage limits, you protect yourself from potential wage garnishment and asset seizure in the event of an accident. Choose comprehensive coverage for peace of mind and long-term financial security on the road.

For even more protection, consider a personal umbrella policy. Contact your independent agent to see what options are best for you.