Nearly 80% of Americans have their own car. Driving can be dangerous: accidents are inevitable. For drivers who have higher risks of being sued, liability insurance is one of the most important insurances. It can protect the insured party against claims from injuries and damage to people or property. Liability insurance can cover not only legal costs, but the payments that the insured party is legally responsible.

If you are a driver, it’s better for you to have a thorough understanding on how auto liability insurance works.

Accidents do happen sometimes, even you are a perfect driver. If you are the one who causes the accident, whether it’s big or small, your liability insurance will pay for the damage you caused to the other person’s car and yours. If someone get injured, the medical bill together with their lost wages will be paid by your liability insurance.

Auto Liability insurance is required in every state except New Hampshire. Insurance policies vary by state. Coverage offered by insurance companies is a three-part package, such as 25/50/25. The first 25 stands for the coverage for bodily injuries you caused to one person, in thousands; the 50 means the body injuries you caused to all people; the second 25 means the property damage. Provisions not covered include Intentional damage, contractual liabilities, and criminal prosecution.

However, there still are some limits of auto liability insurance.

Auto liability insurance doesn’t cover all damage to your car or property or your injuries. It’s for damage and injuries to others. That’s why most drivers buy additional auto insurance as well, such as collision and PIP.

If you are in a serious accident, it’s possible that you still have to pay some of the money-insurance can’t cover all. It’s recommended to buy umbrella insurance if you are able to swing it. Umbrella insurance provides additional liability coverage to your home and vehicle.

Nobody likes to pay for insurance or have accidents. But when accidents really come, you’d be grateful that you purchased insurance.

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