How Does Car Liability Insurance Work?
One of the main parts of a car insurance policy is liability. Liability insurance provides compensation for damages and injuries a driver may cause while operating the insured vehicle. The common liability coverages on car insurance are:
Property damage liability
Bodily injury liability
Liability in a Fault State
Liability compensation works differently depending on the state. Most states are split into two categories: fault states and no-fault states.
In no-fault states such as Michigan, fault does not normally apply to damages and injuries in an accident. If you are injured in an accident, you must file a claim with your car insurance policy in order to receive compensation.
In fault states such as Texas, whichever driver is determined to be at-fault for the accident is responsible for filing a car insurance claim in order to compensate for the damages or injuries. For example, say you cause a wreck, resulting in the other car being damaged and two people suffering minor injuries. The insurance providers will investigate the incident to determine who was at-fault. If you are determined at-fault, you will have to file a claim with your insurance provider to cover both your expenses and the expenses of those in the other vehicle.
Can You Be Sued for a Car Accident if You Have Liability Insurance?
Car liability often helps prevent lawsuits by providing compensation to those who are victims of a car accident. In some cases, however, another driver or victim may still choose to file a lawsuit. Thankfully, part of liability insurance also helps the insured driver with expenses related to a lawsuit such as defense costs and court fees.
How Much Liability Insurance is Required?
Liability insurance requirements vary by state. Many no-fault states also require drivers to carry personal injury protection, which provides compensation for the driver’s and their passenger’s medical bills after an accident.
In Colorado, all drivers must carry at least:
$25,000 in bodily injury liability per person
$50,000 in bodily injury liability per accident
$15,000 in property damage liability
Insurance providers often offer higher limits for those who believe they need more coverage than the minimum requirements. Some drivers may also choose to enhance their car insurance’s liability coverage with an umbrella liability policy. Umbrella liability insurance covers gaps left by your existing liability insurance policies.
Not every driver needs the same amount of insurance, so make the best decision for your vehicle and passengers.