Exactly What is Auto Liability Coverage and How Does That Stuff Work?

The Liability Lowdown

The Wreck That Roared

You can be held accountable for an accident without ever touching another vehicle. Imagine this scenario: You’re innocently tooling down the road, oblivious to anything but the babe or the hunky dude you’ve been ogling as they strolled along the sidewalk. Suddenly, wham! You’ve caused another vehicle to swerve into the curb and slam on its brakes to avoid hitting you because you ran that BIG RED STOP SIGN, and that car, in turn, has been crashed into by yet another vehicle. Now you’re looking square in the face of not only a property damage claim against you by two drivers with totaled cars, but possibly one or more bodily injury claims as well.

Or suppose you're talking on your cell phone to that babe or hunky dude you met at the scene of your last wreck, when Dippy the dog runs out in front of your car. You swerve to miss him and run smack into Acme Electric Company's utility pole. The pole itself is going to cost you, to be sure. They don’t give those things away. But what about Acme Electric’s lost revenue because it can’t provide power to its customers? Now you’re looking at possibly thousands of dollars. The utility company will no doubt have its own insurance provider, but that insurer is going to come looking for you-know-who to reimburse them either by writing a check on the spot, paying monthly installments, garnishing your wages, or – hopefully – making use of that fully adequate liability coverage you were smart enough to buy.

A Price on the Priceless?

Now let’s take a closer look at bodily injury liability coverage and see how far the state-required minimum limits will go. These limits vary from state to state, but pretty much standard minimum coverage is $15,000 per person and $30,000 per accident for bodily injury liability. This means that if you are at fault for injuring, disabling, or even killing another human being, all your coverage will pay out is $15,000. If you do the same to two or more people, your insurance provides only $30,000 to be divided amongst two or 20 people, however many are involved. What happens then? Those people will no doubt have attorneys who will immediately go after any financial assets you have – your house, your car, your boat, your savings account – anything they can to compensate their client(s) for medical bills, pain and suffering, car repairs, or in case of a death, provision toward the care of dependent survivors. You really don’t want to go there, now do you?

Do Unto Others . . .

You’ve got to look at it from an accident victim’s perspective: If it were you instead of them, wouldn’t you want to have quality medical treatment, your car repaired or replaced, or if you die, wouldn’t you want to know your family is going to be taken care of adequately?

So How Much is Enough?

This is a good place to give some deep thought on how much liability insurance – both bodily injury and property damage -- is really right for you. Professionals in the field strongly suggest liability limits of $100,000 per person, $300,000 per accident for bodily injury liability, and $100,000 property damage liability along with an excess or umbrella policy for $1 million.

Look Beyond Your Nose

There is a mistaken notion among students and other young people that because they have nothing, there is nothing they can lose. What they don’t think about is their future. After they get out of college and/or when they are bringing home a real paycheck, that income can – and will – be garnished, if necessary, if they wind up the loser in a lawsuit.

Up your Auto Coverage ASAP!

Of course, you can only afford what you can afford. But make it a priority to increase your coverage as much as possible as soon as possible. Then you can breathe a little easier when you get behind the wheel and hit the road – just don’t get hit yourself!

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