Probably one of the most important parts of any car insurance policy is the vehicle liability insurance. This is coverage which is normally required at a minimum in virtually every state which mandates that all drivers carry car insurance. So let’s discuss more about this coverage and explain what it does.
Vehicle liability insurance covers the policy holder against associated with damage to people and property as a result of an at fault accident. So if you cause an accident which damages other vehicles or which injuries people, the liability insurance will cover the loss up to the limits as established by the policy.
In addition, if someone is hurt as a result of an accident which you caused, they may decide to sue you for damages associated with their loss and injury. They may have extensive medical expenses associated with their injury. In addition the person who was hurt may be unable to work because they are injured. This causes them to suffer a great deal of financial loss so they decide to sue you to cover all or a portion of their loss.
If you did not have liability coverage you would be responsible to pay for these losses if the injured party prevailed in court. If you were unable to pay, you could end up losing anything you owned of value including your vehicles or home. It could certainly be a devastating situation.
But the liability coverage is designed to pay for these expenses. In addition it would cover the cost of legal assistance in the even that you were sued.
But it is important to realize that you need to choose the amount of liability coverage very carefully. This is because the insurance company will cover you for the losses incurred up to the maximum amounts set by your policy.
Typically the liability limits are a minimum of $10k and can range up to $1M or more. So if you set a liability limit of $50K but are successfully sued for $100K, you could be personally liable for the difference.
This is an especially important consideration if you have assets or strong financial resources. Another consideration is that the level of expertise for legal representation is stronger for policies which have higher limits.
In any case it is very important to protect and your assets by obtaining the right kind of liability coverage and then setting limits which are appropriate for the degree of risk to choose to take and your financial resources.