Definition

• The Insurance Information Institute (III) defines liability insurance as the legal obligation a policyholder is to pay in case of a car accident. Liability insurance protects the policyholder and pays, up to the policy limit amount, monetary compensation to the driver/passenger(s) injured in the other vehicle or for other property damaged (including autos directly and indirectly involved in a car accident). Liability insurance is categorized as bodily injury and property damage coverage. Each state determines if the liability coverage of auto insurance is “compulsory” (mandatory) or optional.
  
  

State Minimum Liability Coverage

• States that require this coverage set the minimum amounts for bodily injury and property damage liability limits insured drivers must maintain. It is recommended that the policyholder get more than the state minimum amounts of liability coverage on their auto insurance policies because claims typically exceed these low limits. The liability coverage amounts on a policy can be expressed by a series of three numbers 15/30/10, with each number representing $1,000. The numbers would mean: injury to one person is $15,000 per accident, injury to driver/passenger(s) is $30,000 per accident, and property damage is $10,000 per accident.*
  
  

Bodily Injury Liability

• The driver who is at fault will pay the injured driver/passenger(s) in the other car through his bodily injury liability coverage, up to the policy limit amount. Bodily injury coverage should not be confused with (PIP) personal injury protection (also known as medical payments) because PIP coverage is for a policyholder’s injuries and personal medical bills. Here is the breakdown of the bodily injury coverage numbers 15/30: $15,000 per person per accident and a total of $30,000 paid for all individuals in an accident, including the driver and any passengers.*
  
  

Property Damage Liability

• Auto insurance policies also include property damage liability coverage for objects other than automobiles. Fences, light poles, trees, and guard rails are some of the other objects covered under the property liability coverage during a car accident. It is the last number in the series of three numbers; the number “10” represents $10,000. This is the total amount paid for property damage per accident.*
  
  

Additional Auto Insurance Information

• It is advisable to obtain uninsured and underinsured coverage (if offered by your state) in case there is an accident with an uninsured, underinsured or a hit and run driver. Choose a well-known insurance company versus a no-name one and do not use the criteria of price alone. Visit the National Association of Insurance Commissioners’ (NAIC) website and click on a state from the map to find state-by-state information. State information includes: auto insurance guides; fact sheets; rate comparison charts; FAQs; and a glossary of terms.
  
  *Represents the state minimum example of 15/30/10