Liability Insurance: A Simple Guide to Liability Auto Insurance and Auto Liability Coverage

Liability Auto Insurance, or casualty insurance, covers a third party’s Bodily Injury (BI) or Property Damage (PD) expenses a driver is responsible for.

This eHow video explains what auto insurance is and what it does.

There is a fixed amount of coverage for each liability insurance policy. This maximum pay out limit is split up into three different maximum pay outs: Bodily Injury / Death to a single person, Bodily Injury / Death to multiple people, and damage to property.

This is the most common type of auto insurance; 49 of the states and the District of Columbia all require their drivers to have minimum coverage for BI and PD liability insurance, but the minimum acceptable coverage amounts in each category vary from state to state.

In California, for example, the minimum acceptable liability insurance is as follows: $15,000 limit on injury or death to one person (BI), $30,000 limit on injury or death to multiple people (BI), and $5,000 to damage on property (PD).  This requirement is usually expressed as (15000/30000/5000).

What this means is, if a driver in California with the minimum possible liability insurance were to hit a car full of people, his or her insurance could cover up to $15,000 of the medical costs for any one person, but could only cover up to $30,000 total for the resulting medical expenses for all of the people in the car.  Furthermore, that driver’s insurance could cover up to $5,000 of the property damages done in the accident.  If the damages and expenses to the other drivers totaled more than his liability insurance policy could pay, that driver could be held financially responsible to pay for the excess.

If you are found liable for expenses that are greater than the maximum payout limits of your liability insurance, you will still be held financially responsible for these expenses.  If your insurer doesn’t pay for all of the expenses, you could even get taken to court.

To find out more about all of the vehicle insurance requirements and regulations in your state, please visit our page on the Car Insurance Requirements in Each State.