What is Liability Coverage and How Much Should I Have?

What is Liability Coverage?

Liability coverage is a type of auto insurance that helps to pay for another person’s injuries or property damage that you are responsible for in an accident. It is broken down into two parts: property damage and bodily injury. Property damage coverage pays for any damage to another person’s property, while bodily injury coverage pays for medical expenses and other costs related to an injury. Liability coverage is usually required by state law in order to legally drive, and it can provide financial protection if you are sued as a result of an accident. This coverage can also help cover legal fees and judgments resulting from a lawsuit.

What are the Different Types of Liability Coverage Available?

1. Property Damage Liability Insurance

Property damage liability insurance is coverage that pays for repairs if you damage another person’s property in an accident you’re at fault for. It covers physical property, such as vehicles and garage doors, and can also cover things like rental vehicles and diminished value. Bodily injury liability coverage is a separate type of auto insurance that helps pay for medical bills and other costs related to injuries sustained in an accident when you’re found at fault. The amount of coverage you need depends on the value of your assets, but it’s important to have enough coverage to protect yourself in the event of an accident.

2. Personal Liability Coverage

Personal liability coverage is a type of automobile insurance that helps to protect the policyholder from being held financially responsible for injuries or property damage resulting from an automobile accident for which they are at fault. It is typically required by most states and is usually broken down into two parts – property damage and bodily injury coverage. Property damage coverage pays for damages to the other party’s property, while bodily injury coverage pays for medical bills, lost wages, and pain and suffering caused by the accident. Liability coverage does not cover the policyholder’s own property damage or injuries, which are usually covered by other parts of the policy, such as collision and medical payments coverage.

3. Uninsured Motorist Coverage

Uninsured motorist coverage is an important type of vehicle insurance coverage required in some states. It provides protection and coverage for you, your passengers, and your vehicle if you are hit by an at-fault driver who either does not have insurance or does not have enough coverage to cover the damages from an accident. It covers medical bills and vehicle repairs up to a certain limit and can help to protect you in the event of an uninsured or underinsured driver.

Underinsured motorist coverage is also often included in the same policy and helps to cover medical costs and other damages if the at-fault driver’s insurance limits are too low to cover all of the medical bills or damage from an accident. Uninsured motorist property damage, or UMPD, is also sometimes included in UM and UIM coverage and provides coverage for damage to your car or home in the event of a hit and run driver or an uninsured driver, though you may not need both UMPD and collision coverage since they essentially cover the same thing.

Having uninsured motorist coverage is important to protect yourself and your vehicle in the event of an accident with an uninsured driver. It is also important to check with your state in order to see if it is legally required and to make sure you have adequate coverage.

4. Collision Coverage

Collision coverage is an optional type of car insurance that covers the cost to repair or replace your car if it’s involved in an accident with another vehicle or object. It is typically required if you are leasing or have a loan on your vehicle. Collision coverage is usually purchased with a deductible, which is the amount you are responsible to pay out of pocket before the insurance company will cover the rest of the cost to repair or replace your car. It is estimated that 74% of drivers purchase collision coverage. Comprehensive insurance is generally recommended if you can’t replace your car with cash in the event of a total loss.

5. Rental Reimbursement

Rental reimbursement coverage is an important addition to a business’s insurance policy due to the practicality and financial benefit it provides. This coverage pays for a rental car while your car is being repaired due to an insured loss, such as an accident. This can be especially beneficial for businesses, since they typically require employees to use their own vehicles to travel to meetings and other appointments. Without rental reimbursement coverage, businesses may have to pay out of pocket for rental cars if an employee’s car is damaged or needs to be serviced. This additional expense can be a burden to a business’s budget.

Rental reimbursement coverage can also provide peace of mind for business owners and employees alike. Knowing that an employee will be able to get to their destination as scheduled, even if their car is in the shop, can save businesses from having to reschedule meetings and other important work-related activities. Additionally, with many policies providing coverage for up to 20 percent of the insurance on your business’s house, businesses may be able to get full coverage for their rental car. This can provide an added layer of protection in case of an accident.

Overall, rental reimbursement coverage can provide businesses with a secure and cost-effective way to handle the situation of an employee’s car being rendered undrivable due to an accident or other insured loss. This coverage can help businesses avoid costly expenses and ensure that employees are able to continue their work.

6. Medical Payments Coverage

Medical payments coverage, or MedPay, is an auto insurance coverage that pays for medical expenses for you, your passengers or any family members associated with an auto accident—no matter who’s at fault. It is typically required in just two states: Maine and New Hampshire. Coverage limits typically start at $1,000 per person and max out at $10,000 per person.

MedPay covers initial medical expenses, such as doctor visits and hospital bills, for the driver, passengers and family members involved in the accident. It may also cover funeral expenses, physical and occupational therapy, lost wages, and funds to hire subcontractors if you’re self-employed. Additionally, it might cover legal fees and legal counsel if the other party decides to file a lawsuit against you.

7. Hail Coverage

Hail coverage is a type of comprehensive coverage that is included in most car insurance policies. It provides coverage for damage to your vehicle caused by hail. Hail coverage offers protection from losses due to large pieces of hail crashing down on your car, causing dents and other damages.

Generally, comprehensive coverage takes care of hail damage, but you may want to check your policy to make sure it’s included. Other characteristics of hail coverage include protection from ice, snow, sleet, and other kinds of falling objects. It may also cover vandalism and theft, as well as certain types of weather-related damage, such as flooding and earthquakes. Additionally, it may provide coverage for repair or replacement of broken glass, such as windshields and windows.

It’s important to note that hail coverage does not cover damage from collisions or accidents that are your fault, as those are covered by liability insurance. It also doesn’t provide coverage for damage to your car due to improper maintenance or wear and tear. You should also be aware that hail coverage typically requires a deductible, so it is important to determine how much you are comfortable with before you purchase a policy.

8. Storm Coverage

Storm coverage is an optional form of insurance that provides financial protection against damages caused by natural disasters such as hurricanes, tornadoes, and other severe weather phenomena. This type of coverage typically covers damages to a property’s structure, possessions inside the home, and living expenses while the property is being repaired. It can also include coverage for vehicles, debris removal, and additional living expenses. There is usually a deductible associated with this type of coverage, which must be paid before any claims can be made. Standard homeowners policies may not provide adequate coverage for losses associated with natural disasters, so it is important to have an adequate level of storm coverage to ensure that you are fully protected.

9. Other Extensive Coverage

Other extensive coverage is a type of car insurance policy that provides additional coverage beyond state-required minimums. It includes comprehensive and collision coverage, which covers damages to your vehicle caused by theft, fire, weather, vandalism, or hitting an animal, as well as other optional coverages such as rental reimbursement, roadside assistance, and gap insurance. Comprehensive and collision coverage can help pay for repairs to your vehicle or replacement of your car in the event of a covered claim, while the additional optional coverage can help to cover the costs of a rental car, towing services, and more. Umbrella policies are also available, which provide additional liability coverage of up to $1 million or more.

10. Liability Coverage Requirements

What are the liability coverage requirements? The liability coverage requirements vary from state to state and depend on the type of vehicle insured. Generally, most states require car owners to have at least liability coverage in order to legally drive their vehicles. This coverage typically includes property damage and bodily injury coverages. Property damage coverage pays for damage to another person’s property, while bodily injury coverage provides payment for others injured in an accident. Many states also require additional types of insurance such as uninsured motorist coverage or personal injury protection. It is important to stay up to date on your state’s laws and regulations and to ensure that you have enough liability insurance to protect all of your assets.

How much liability coverage do you need?

When it comes to determining how much liability coverage you need, it’s important to compare and contrast your individual situation. Generally, a good rule of thumb is to have enough liability insurance to protect all of your assets, which includes real estate holdings, savings and checking accounts, investments, college and retirement funds, and even future potential earnings. However, there are a few other factors to consider, such as the state requirements for liability insurance, your risk tolerance, and any additional risk factors you may have.

For auto insurance, it’s recommended to have at least 100/300/100 coverage, which covers up to $100,000 per person and $300,000 per accident. For homeowners insurance, make sure you have a minimum of $100,000 in personal liability coverage, but some carriers offer up to $500,000 or even a million in personal liability coverage. While it’s possible to lower your premium by carrying less liability coverage, most experts recommend against it as there are better places to save.

Before deciding on the amount of liability coverage you need, be sure to talk to your InsuraMatch agent and consider all of the variables involved. That way, you can make sure you have enough coverage to protect yourself and your assets.