Can You Get Liability
Yes, its possible to get a car insurance policy thats only liability coverage instead of full coverage.
But even if you own your car outright or if you have an old car and you dont need comprehensive or collision, you should still set your liability limits as high as you can afford.
Since state minimum requirements are usually low, getting only the required amount of liability insurance could leave you stuck with tens of thousands of dollars worth of bills if youre involved in a serious accident.
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What Is The Importance Of Compulsory Insurance
The purpose of implementing the mandatory insurance is to cover all relevant people and/or risk. The univer- sal health insurance is to cover all peoples health care and mandatory auto insurance is to ensure that all auto drivers have the minimum liability insurance.
Why insurance is mandatory?
Buying insurance is similar to saving money to cover yourself financially in case of an accident. The government has made it mandatory to buy car insurance because no person should suffer a financial loss from an accident. If they do, they should be compensated fairly.
What Does Swiss Basic Insurance Cover
If you live in Switzerland, you must take out basic insurance.Illness, accident and maternity are covered by basic insurance. If you work for more than eight hours with the same employer, you are covered for accident insurance through your employer. Additional accident cover via basic insurance is then not necessary.
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How Do Companies Decide What To Charge Me
Insurance companies use a process called underwriting to decide whether to sell you a policy and how much to charge you. The amount you pay for insurance is called a premium.
Most companies consider these things when deciding your auto insurance premium:
- Your driving record and claims history. Insurance companies will charge you more if youve had accidents or gotten tickets. Some companies might refuse to sell you a policy.
- Where you keep your car. Rates are higher if you live in a city. This is because people in cities are more likely to have accidents or have their cars stolen than people in rural areas. Rates can also vary between ZIP codes in the same city.
- The kind of car you have. Collision and comprehensive rates are highest for luxury, high-performance, and sports cars. Rates are also higher for cars that cost more to repair.
- How you use your car. Your rates will be higher if you drive your car to and from work or use it for business.
- Your credit score. Some companies use your credit score to decide what to charge you. To find out which companies use credit scores, visit HelpInsure.com.
Insurance companies check your claims history.
Requirements For Liability Car Insurance
Each state sets a minimum for how much liability coverage a motorist must carry. For example, a state might require all drivers to have liability insurance that covers $25,000 for injuries to one person, $50,000 for injuries to multiple people, $50,000 for death of one person, and $10,000 for property damage. Drivers can typically buy more liability insurance than their states required minimums, and its often smart to do so since medical bills can be very expensive.
If you have considerable assets to protect from a possible lawsuit, you may also want to consider buying an umbrella insurance policy, which can increase the liability coverage on both your auto and homeowners insurance policies to $1 million or more.
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The Liability Insurance Formula
Liability insurance limit amounts are given as three numbers separated by slash marks, for example, 50/100/50.
In this case, the first 50 means $50,000 and refers to the amount of bodily injury coverage per person covered by the policy. The 100 means $100,000 of bodily injury coverage per accident. The last 50 refers to the amount of property damage liability per accident, which would also be $50,000.
Keep in mind that bodily injury liability is per person, while property damage liability is per accident. If you hit three people and three cars in the same accident, your insurance will cover you for up to $100,000 for the bodily injuries of the people you hit and only up to $50,000 for all three of the cars. In this scenario, you would probably max out the policy, and you would be held liable and possibly sued for any remaining bills.
What Does Public Liability Insurance Cover
Public liability insurance coverage includes the following:
- Bodily injury: Public liability insurance helps to cover expenses if someone is injured.
- Property damage: It helps to cover damage to a third party’s property. Let’s say you own a convenience store, and one of your employees accidentally spills a coffee on a customer’s designer purse. Your policy could help cover the cost of replacing the purse and any damaged contents.
- Legal expenses: It also covers the cost of hiring and paying an attorney to represent your business in a lawsuit brought by a customer or someone else is covered by the policy.
Keep in mind that this coverage only applies to your business property. If you or your employees interact with clients elsewhere, like in their homes, public liability coverage may not provide enough coverage.
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- Personal injury liability
- Uninsured/underinsured motorist
While the last two are not always required in every state, the first two usually are. There are a couple of states that don’t require drivers to carry any insurance however, drivers still have to pay for damages in an accident where they are at fault.
What Does Liability Insurance Mean
Liability insurance is a type of insurance coverage that provides protection to a person or entity against the risk of getting sued and being held legally responsible for malpractice, negligence, injury to other persons, or similar claims. Besides covering the legal costs of a facing a lawsuit, it also pays for any legal payouts in case the insured is found legally liable. However, it generally excludes intentional harm and contractual liabilities.
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Liability Insurance Coverage Limits
The amount your insurer will pay for a covered liability insurance claim depends on the coverage limits you choose. Each state sets minimum coverage limits for bodily injury liability and property damage liability that drivers must purchase, but you may decide to buy additional coverage. You may see three liability coverage limits on your car insurance policy:
Property damage liability limit.
- This is the maximum amount your insurer would pay to repair damage you cause to another party’s property. The maximum payout would not exceed the limit you’ve set.
Bodily injury liability limit per person.
- This is the maximum payout for each person who’s injured in an accident that you cause.
Bodily injury liability limit per accident.
- This is the total amount your insurer will pay out for all medical expenses for a single accident you’re at fault for. It’s important to set this limit at an amount that makes you comfortableit may be needed to help pay for the medical expenses of multiple people.
Most insurers package bodily injury and property damage limits together. For example, your policy may look something like this:
Your coverage limits depend on the packages your insurer offers. In other words, you may not be able to choose individual limits for bodily injury or property damage coverage.
Children Away At School Or Not Living With You
Some companies require you to keep young drivers on your policy, even if theyre away at school. Tell your insurance company if you have a child living in another city for school. If your child has a car, the company might charge you differently because rates are based on where a car is usually located. If your child doesnt have a car, you might be able to get a discount on your premium. If your child is going to school in another state, check the laws in that state to make sure you have enough liability coverage.
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How Does Personal Liability Insurance Differ From Business Liability Insurance
Personal liability insurance covers individuals against claims resulting from injuries or damage to other people or property experienced on the insured’s property or as a result of the insured’s actions. Business liability insurance instead protects the financial interests of companies and business owners from lawsuits or damages resulting from similar accidents but also extending to product defects, recalls, and so on.
Using Your Liability Insurance
This example illustrates how liability insurance is used and how not having enough liability insurance may lead to you paying out-of-pocket costs.
Susan is driving home from work and hits another vehicle. The other car is driven by a couple, Dan and Amy, with their child, Allison, in the back.
Susan has 50/100/50 in liability insurance.
- Dan injures his back, and his medical bills total $30,000.
- Amy breaks an arm and suffers internal injuries. Her medical bills cost $45,000.
- Allison breaks a leg, and her medical bills cost $7,000.
This scenario is covered by Susan’s plan because all three people’s injuries total $82,000, and Susan is covered for up to $100,000 per accident.
As a comparison, imagine there’s a fourth person in the car, Tony, and Tony’s medical bills total $40,000. Susan would then be on the hook to pay the extra $22,000 not covered by her liability insurance.
This also assumes no one in the car Susan hits sues her for lost wages or pain and suffering. Medical expenses add up quickly and can easily bankrupt you.
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The Two Forms Of Auto Liability Insurance Coverage
There are two types of auto liability insurance coverage, and most states and Washington, D.C., require you by law to have both, according to State Farm. The two liability insurance types include:
- Bodily Injury Liability Protection: This insurance covers a third party’s physical injuries because of an accident. According to Investopedia, this protection also covers legal fees, pain and suffering, and lost wages.
- Property Damage Liability Protection: This insurance covers the cost of vehicle damage or replacement and other property damage, such as mailbox and fence post repair.
The limits set for both insurance types are per accident.
Your state might also require other forms of liability protection, such as uninsured motorist coverage and property protection. Check with your state’s auto insurance laws or your insurance company’s agent to determine the minimum requirements for your policy. As of 2014, says Investopedia, New York requires its drivers to carry liability insurance that will pay $25,000 for injuries to one person, $50,000 for injuries to multiple people, and so on, in addition to $10,000 for property damage.
You’ll find that most insurance companies will package liability protection together. Allstate, for example, offers 25/50/10 policy coverage, which translates to:
- $25,000 bodily injury per person limit.
- $50,000 bodily injury per accident limit.
- $10,000 property damage limit.
Will The Insurance Company Pay For A Rental Car
If your accident was caused by another driver, the other drivers insurance company will pay for you to rent a car. You can keep the rental car for the time the company believes is reasonable for your car to be repaired. The company will base the amount of time on the estimated number of hours of labor. Be sure to let the adjuster know about any delays in getting your car fixed. The company might extend the rental if there are delays because the repair shop had to order parts or found more damage.
If the company totals your car, it will probably stop paying for the rental a few days after telling you.
Your insurance company will pay for a rental car if:
- you have uninsured/underinsured motorist coverage and the driver who caused the accident didnt have insurance or enough insurance.
- you have uninsured/underinsured motorist coverage and the accident was a hit-and-run.
- you have rental reimbursement coverage and were in an accident.
- you have comprehensive coverage and your car is stolen.
Your insurance company will pay for a rental car only for the time it believes is reasonable to repair or replace your car. It will pay a set amount each day and only up to your policys rental coverage dollar limits.
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How Do You Determine Liability After A Serious Incident
To file for compensation through a liability-based insurance policy, you may need to establish that the policyholder bears liability for your accident and your injuries. How do you determine liability after a serious incident?
In some cases, you may have an accident report, including a police report, that clearly establishes who bears liability for the accident based on information and evidence available at the scene. For example, if you suffer serious injury in a car accident with a drunk driver, you may have a police report that states that the drivers negligent action caused the accident, and even that the drivers blood alcohol content shows a high level of inebriation.
If you suffered injuries in a slip and fall accident, you may have a report from the scene of the accident that shows the liable partys actions and how they led to your injuries: failure to clean up a spill promptly, for example.
To determine liability after a serious accident, both lawyers and insurance companies look at several key questions.
Split Limit Liability Example
Imagine you cause an accident that injures three people, and their medical bills are $10,000 per person. Your 25/50/25 liability car insurance would cover this because each persons injury cost is below the $25,000 per-person maximum, and collectively their injury costs are below the $50,000 policy maximum.
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Types Of Auto Coverages
There are eight basic auto insurance coverages. You can choose whether to buy the others.
Think about buying more liability coverage. The minimum liability limits might be too low if you cause a multi-vehicle accident or the other drivers car is totaled. If you dont have enough liability coverage to pay for the damages and injuries you cause, you might have to pay the rest out of your own pocket. The other driver could sue you.
Why Should You Consider More Rather Than Less
While most states require drivers to carry basic liability insurance, which offers the minimum coverage limits required by law, its a good idea to purchase higher coverage limits than your state requires.
Why? Lets say you were distracted while backing out of a parking space and you didnt see a car behind you that happened to be driving by. And then you hit that car, slightly injuring the driver and her passenger.
After an investigation, youre determined to be at fault for the accident. Your auto liability coverage will pay for the damage to the car you hit as well as for the medical bills from the injuries sustained by the driver and the passenger, including pain and suffering, and lost wages.
If the damages you cause exceed the liability limits you have chosen, you could find yourself personally liable for all of the costs that exceed the amount your insurance policy can pay. If youre unable to pay those bills, it could result in garnished wages, liens against your assets and even court fees.
To fully understand the difference between minimum liability coverage and the amount of coverage you may actually need, contact a State Farm agent.
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Who Needs Professional Liability Insurance
If you work for a company that offers services, the company should have PLI, and your services should be covered under its policy. However, if you’re a small business owner providing professional services or contracting your services to other businesses, you should consider purchasing this type of insurance. Some examples of professionals who need this insurance are:
How Do You Read Policy Limits
Asked by: Jacquelyn Koss
Auto Liability Coverage limits are typically written out in three numbers, such as 100/300/50. This means you have a $100,000 limit per person for bodily injury in an accident, a $300,000 total limit per accident for bodily injury, and a $50,000 limit per accident for Property Damage.
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What Does Personal Liability Insurance Cover
Personal liability insurance covers a variety of situations where you may be legally responsible to pay for something that happened to someone else on property that you own or, in some situations, on property that you dont own. Some examples of common personal liability claims are:
- Medical bills that result from a visitors injury at your home
- Legal expenses resulting from lawsuits that seek to recover damages that are potentially covered by the policy
- Bodily injury or property damage that results from your negligent acts or omissions
- Bodily injury or property damage caused by your pets