Question By: Liability coverage in auto insurance is a fundamental component that protects drivers financially if they are found responsible for causing an accident. This coverage is typically divided into two main parts: bodily injury liability and property damage liability.
Bodily injury liability covers the medical expenses, lost wages, and legal fees of other people who are injured in an accident where the policyholder is at fault. It also covers pain and suffering and funeral costs in the unfortunate event of a fatality. The coverage is generally expressed in a per-person and per-accident limit, such as $50,000 per person and $100,000 per accident. This means the insurer will pay up to $50,000 for each injured person, with a maximum of $100,000 per accident, regardless of the number of people injured.
Property damage liability pays for the repair or replacement of other people's property damaged in an accident caused by the policyholder. This could include other vehicles, buildings, fences, or any other property. This coverage also has a limit, such as $25,000, meaning the insurer will cover up to that amount for damages per accident.
Liability coverage is mandatory in most states, with minimum required limits varying by state. However, it is often advisable to carry higher limits than the state minimum to ensure adequate protection. If damages exceed the coverage limits, the policyholder may be personally responsible for the remaining costs, which can lead to significant financial hardship.
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