Liability auto insurance is necessary for most drivers, but what is it and how does it work? Essentially, liability auto insurance pays for damages to another person or entity caused by your car. The policy you choose must be comprehensive enough to cover all of these costs, but there are several factors you should consider as well. In this article, we will discuss the Limits, Conditions, and Exclusions of liability auto insurance. We will also go over the price of these policies.
Your limit of liability is determined by how much your state requires for your auto insurance policy. It is also based on your assets and financial situation. If you’re on a budget, you might have to settle for the minimum limits required in your state. However, if you have substantial assets, you should consider higher limits and perhaps adding a personal umbrella policy. This will give you an added layer of protection in the event of a crash.
Bodily injury liability coverage pays for any medical bills for the injured party and any loss of income or pain and suffering. Property damage liability pays for damages to other people’s property or vehicles that you hit. It also covers the costs of replacing a damaged storefront or fence. The amount you are required to pay for bodily injury and property damage will vary from state to state, but in Illinois, it is generally $25,000 per person, $50,000 total, or $20,000. However, you may need to choose higher limits to protect yourself from lawsuits.
When selecting liability limits for your auto insurance, you should consider the amount of coverage per accident. This limit should not exceed your insurance policy’s maximum limit, as this could result in you paying more than you should. For example, if you hit someone and their car costs $10,000, your liability limit must be at least $20,000. If you hit a pedestrian in a pedestrian crossing, your limit should be $25,000.
An auto insurance policy contains a section entitled “Exclusions.” These exclusions are intended to avoid overlap between coverages and to relegate all risks to the carrier. Among these are driving a car for business purposes, riding in a rideshare, and making deliveries. The use of an auto qua auto is also an exclusion. If you’re in the business of making deliveries, make sure you get a special endorsement.
Moreover, the coverage varies widely. Typically, a liability auto policy has a set of exclusions. These exclusions are meant to limit coverage for risks that underwriters don’t choose to underwrite. Each exclusion has a breadth and substantive difference. Most insureds overlook the breadth of exclusions, but understanding them is critical to understanding coverage. For example, if the other driver used force, the injured party may not receive any compensation for the injury.
Similarly, the coverage of the named driver in an auto liability insurance policy is limited. The named driver exclusion will remain valid for the time being, but the endorsement language must specify that the total exclusion is limited to situations where the other driver has alternative liability insurance coverage. The named driver must also have their own liability insurance policy. These are only a few examples of the different types of exclusions. If you’re unsure whether a particular exclusion applies to you, consult with your insurance agent.
In addition, some insurance policies will also exclude certain actions of household members. These actions or behaviors can prevent a legal action or a payout from an insurance company. The simplest method for excluding a driver is to name them in the exclusions in the policy. The exclusions can also lower the cost of the premium. This method can save you a lot of money in the long run. So, consider excluding the driver if your situation warrants it.
The cost of liability auto insurance depends on several factors, including the make and model of your car, any custom work, and your driving record. If you have had a history of tickets or accidents, your liability auto insurance rates will likely be higher than average. Your insurance company may even raise your rates by 20% or more. To find the cheapest policy, get several quotes and compare them. ValuePenguin’s analysis relies on public data and insurance rate data from Quadrant Information Services. However, individual quotes may differ from those presented in this article.
The cost of liability auto insurance can vary widely from state to state, and it is important to note that the average rate does not reflect state minimum limits. For example, liability coverage is twice as expensive in New York as it is in New Mexico. By contrast, Erie offers the cheapest liability coverage, at $371 a year. There are several companies that sell liability car insurance at a price well below the national average. In addition, your final rate will depend on your driving record and the limits you choose.