The automobile liability coverage takes care of any liabilities, damages, and defense costs an insured is legally bound to pay for. The cost of defense can cover over and above the liability limit, but this cannot be provided if the liability is not covered. In cases where the liability is covered, the insurance provider has the right to investigate and independently resolve any claims of the insured.
In many states in the US, auto liability coverage is one of the legal requirements for anyone who owns and drives a private car. It entails financial protection for the insured who, while driving a vehicle, accidentally or unintentionally destroys a property or harms someone. This type of insurance only covers damages or injuries to third parties and their property but not to the insured and their property.
There are two components of automobile liability insurance. These are the bodily injury liability and property damage liability.
Bodily Injury Liability
Sometimes abbreviated as BI, bodily injury liability coverage helps cover private vehicle drivers who is at fault so they do not need to pay the injured out-of-pocket. The insurance provider pays for all on-going medical expenses, funeral costs, or loss of income of another person the insured might have hurt in an accident. The bodily limit of this coverage sets up a maximum payout for the individuals involved and hurt in the accident caused by the insured.
For legal matters, the bodily injury liability also helps cover the insured’s legal fees when an accident leads to a lawsuit.
Property damage liability
Property damage liability is the coverage that takes care of the costs for repairing any damage caused to another vehicle and property such as a home or a business establishment during a vehicular accident, up to the coverage limits of your insurance. This type of insurance will also provide financial support for your legal defense if and when a suit is filed against you after the accident. However, this insurance coverage has two limits: the first one is per accident and the other is per person.
Minimum and Maximum Limits
The limit of coverage of automobile liability is the maximum dollar amount your policy may pay per accident. For example, if a policyholder has a property damage limit of $15,000 and cause $20,000 in damages in an accident, the policyholder is responsible for the remaining $5,000.