Facts About Liability Only Auto Insurance Coverage
All States Have A Financial Responsibility Law If you drive a vehicle, you are required to show proof that you are financially able to pay for damages if you are involved in a collision. This requirement applies whether or not you are at fault in an accident.
If you are unable to provide the required proof you become subject to certain penalties which includes the suspension of your driver's license or revoking your vehicle registration. The simplest and most cost-effective way of complying with the financial responsibility law is the purchase of an automobile insurance policy.
Liability Insurance Coverage The major component of an auto insurance policy is liability coverage which provides compliance for the financial responsibility laws with state defined liability limits. Liability insurance pays for bodily injury and property damage if you are at fault in an accident. Each state has set minimum limits for liability coverage.
Those limits are: State-by-State Minimum Requirements
* Alaska 50/100/25
* Alabama 20/40/10
* Arkansas 25/50/15
* Arizona 15/30/10
* California 15/30/5
* Colorado 25/50/15
* Connecticut 20/40/10
* Delaware 15/30/5
* Florida 10/20/10
* Georgia 15/30/10
* Hawaii 20/40/10
* Idaho 20/50/15
* Illinois 20/40/15
* Indiana 25/50/10
* Iowa 20/40/15
* Kansas 25/50/10
* Kentucky 25/50/10
* Louisiana 10/20/10
* Maine 50/100/25
* Maryland 20/40/10
* Massachusetts 20/40/5
* Michigan 20/40/10
* Minnesota 30/60/10
* Mississippi 25/50/25
* Missouri 25/50/10
* Montana 25/50/10
* Nebraska 25/50/25
* New Hampshire 25/50/25
* New Jersey 15/30/5
* New Mexico 25/50/10
* Nevada 15/30/10
* New York 25/50/10
* North Carolina 30/60/25
* North Dakota 25/50/25
* Ohio 12.5/25/7.5
* Oklahoma 10/20/10
* Oregon 25/50/10
* Pennsylvania 15/30/5
* Rhode Island 25/50/25
* South Carolina 25/50/25
* South Dakota 25/50/25
* Tennessee 25/50/10
* Texas 20/40/15
* Utah 25/65/15
* Virginia 25/50/20
* Vermont 25/50/10
* Washington 25/50/10
* Wisconsin 25/50/10
* West Virginia 20/40/10
* Wyoming 25/50/20 As you can see, liability coverage is expressed in three numbers.
The first two numbers represent policy limits for bodily injury. The first number is the amount of coverage available to pay for medical expenses of the other person in the accident if you are at fault.
The second number is the amount of coverage that is available to pay medical expenses for all others involved in an accident if you are at fault. The third number is the amount available to pay for property damages of all others involved.
Example: You are driving down a residential street and become preoccupied (lost in thought, on your cell phone, whatever) and don't see a stop sign. Another driver, who has the right of way, is proceeding through the intersection at the same time.
You are driving within the speed limit, but the other driver expects you to stop. By the time you realize you are about to hit another vehicle, you slam on your brakes, but your momentum carries you into the other vehicle.
Clearly, you caused the collision and you insurance company agrees. Your policy would pay for the medical expenses of the other driver for injuries incurred in the accident up to the policy limit (first number).
If the other driver also had passengers in the car your policy would pay for their medical expenses up to the limits of your policy (second number). So, for this example if you are insured in Alaska your insurance company would pay the medical expenses of the driver up to $50,000 or up to $100,000 for medical expenses of driver and passengers.
Your insurer would also pay for the repair of the other driver's vehicle up to the limit of your property damage coverage (third number). If you are sued, it is liability coverage of your policy that provides for your insurance company to defend you in court.
Having liability coverage protects your assets. You Must Determine The Adequacy Of A Liability Only Policy While a Liability Only policy does a lot in protecting you in terms of your responsibility toward others, it does not repair or replace your property.
A liability only policy does not pay for your medical expenses. It also does not protect if you suffer damages when you are hit by an uninsured driver. A liability only policy would need to be upgraded with comprehensive and collision coverage when you trade in your paid for vehicle for a new vehicle that you financed.
It is very difficult to have to tell an Insured with a liability only policy, who has had their car totaled when it was hit while parked, that their policy does not provide them coverage under those circumstances. Lastly, some advice that will not always be taken.
If you can't replace it the next day after an event or you can't do without it, properly insure it.