Simply put liability coverage is what keep you from paying for other people’s medical and car repair expenses when you cause a wreck. The law states that any time you are found liable for a car accident, you have to financially compensate the other parties involved. As you can imagine, this can get really expensive, really fast.
Almost every state in America has set minimum standards for how much liability coverage you need to have. States do this to protect you and other drivers. Liability coverage protects by making sure you don’t go broke after an accident. It protects other drivers by making sure someone pays for their expenses.
How it Works
Most policies break liability coverage down into three categories. The categories are represented by three number, such as 50/100/25. Each number denotes the value of coverage for each category.
50– The first number represents how much coverage you have for individual injuries. In this case the policyholder is covered for $50,000 per person.
100– The second number is the maximum amount you’re covered for per accident for bodily injury. So for if you had this policy, you would be covered for $100,000 per accident.
25– The final number applies to property, in most cases car, damage. This policy pays for up to $25,000 for property damages.
If for some reason the accident costs more than the policy covers, you are responsible for the difference. So if you had the above policy and you T-bone a new BMW, odds are you’ll be paying some out of pocket expenses. For this reason, it’s a good idea to have more than just the state minimum liability coverage.
If you have questions about how much liability coverage you need, give All American Insurance a call.