Types of Liability Auto Insurance

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Bodily Injury and Property Damage

There are two types of liability insurance coverage: Bodily Injury and Property Damage. Bodily Injury Liability covers costs like injury or death that could be incurred in the event of an accident or collision involving injuries to other parties. This type of coverage applies to you and family members listed on your insurance policy. Any covered participants will also be protected when operating someone else’s vehicle, as long as permission is granted by the owner. Liability coverage was created to ensure that both sides of any incident would be covered. If you or a covered member incurs bodily harm or damage to another party, the coverage will compensate for their damage, as well as your own.

There are also state-required minimum levels of insurance that concentrate solely on bodily injury liability coverage. This minimum is placed so that an innocent bystander receiving injuries from your vehicle will be compensated accordingly. This also protects your personal assets and prevents you from paying out-of-pocket for another’s injuries. Here is an example of how this coverage is useful. Suppose you were driving an SUV on a residential street and lost control of the vehicle. If a pedestrian was walking alongside the street, either on the sidewalk or off-road, and was injured by your vehicle, they could sustain serious injuries. Even though it may have been an accident, you are still responsible for the effects. Liability insurance would protect you in these types of cases.

The chance you would be taken to court for compensation above your auto insurance coverage is slight. However, it is possible. States vary on how sympathetic juries are when applying punitive damages in a settlement, so be sure to properly assess your circumstances to be appropriately insured.

The other type of liability insurance coverage is related to property damage other than your own. You and all covered members are protected by this coverage. This applies to damage caused to another’s property, typically their vehicle, but also includes public property (signs, parking structures) and personal property (mailboxes, fences). Keep in mind, if you do not have this type of coverage, you would be responsible for compensating the amount of these damages. Typical occurrences include damaging a car that is more expensive than your own, replacing a sign-post or neighborhood placard, and erecting a telephone pole. These are all costly propositions that could be covered under property liability coverage.

The amount of coverage you need will depend on your driving record as well as those of others on your policy. If you have inexperienced drivers on your policy, this type of coverage could be very useful. If you are the sole operator on your policy and your record is accident-free, you could do with less coverage. Always analyze your risks and subsequent costs. You know what you could realistically pay out-of-pocket for damages versus what your policy coverage costs. Make sure that this balances out, and remember that insurance companies price their programs so that they still make money.