What Does Auto Liability Insurance Cover

What does auto liability insurance cover? When it comes to insuring cars and drivers, state regulations are quite strict. All 50 states require a certain level of liability coverage, so when shopping for an auto insurance policy, it's a good idea to gain an in-depth understanding of what auto liability insurance covers.

Understanding Auto Liability Insurance
There are three parts to a liability insurance policy-bodily injury coverage per person, bodily injury coverage per accident and property damage. The amounts covered for each category will vary, depending on the policy. Cheap auto liability insurance generally covers a minimal amount, while more expensive policies have higher premiums each month. When shopping for auto liability insurance, you will usually see the numbers written this way: 30/60/20. This means bodily injury coverage per person is $30,000; the amount of total coverage per person per accident is $60,000; and the property damage coverage is $20,000. Many states have a minimum requirement for these amounts, and there are many options for increased coverage.

How Auto Liability Is Applied
Using an example of how auto liability insurance is applied to an accident gives a greater insight into each of the three parts of the policy. For example, if you are driving with a passenger and get into a car accident, your auto liability insurance would kick in to help pay for injury and damages to your passenger as well as the other driver, if you were at fault. With a 20/40/10 policy (the minimum amount of coverage required in many states), your insurance would pay $20,000 for bodily injuries per person in the vehicle.

The insurance would limit the total coverage per accident to $40,000, paying out this maximum for any single accident. If each person in the accident had medical bills totaling $4,000, $15,000 and $8,500 respectively, the policy would completely cover the accident. Any amount over the maximum is the responsibility of the policy holder.

The insurance policy would pay out $10,000 for damage to property because of the accident. For example, if the car accident destroyed a fence and street light, this portion of the policy would be used to cover the repairs. 

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