Auto liability insurance is required by law in 49 of the 50 states in the U.S. (New Hampshire and Washington D.C. being the exceptions), but that doesn’t mean the coverage requirements are consistent from state to state. So, what is liability car insurance? Good question.
Liability insurance is the financial safeguard for a motorist who causes a traffic collision. The insurance policy covers the costs of damages and injuries to third parties involved in the accident. This includes the driver of the other vehicle, their passengers and their property (i.e. their car). While this plan protects the insured’s finances to an extent, it does not cover the damages sustained to their own vehicle or person.
Why do a majority of states demand their motorists carry liability car insurance? It’s simple: to protect them from bankruptcy. If you’re involved in an accident and you’re not the one at fault, you want to make sure the other driver’s insurance plan will pay for your damages. Why should your insurance premiums take a hit? You weren’t the one who caused the collision. Let’s take a gander at the advantages of carrying liability insurance.
In a study conducted in 2014 by the Insurance Research Council (IRC) and reported by the Insurance Information Institute (III) research showed that 12.6 percent of motorists, or one in every eight drivers were uninsured as of 2012. The top 10 states known for having the most uninsured motorists? Take a look below.
StatesPercent UninsuredOklahoma25.9%Florida23.8%Mississippi22.9%New Mexico21.6%Michigan21%Tennessee20.1%Alabama19.6%Rhode Island17%Colorado16.2%Washington16.1%
According to the Rocky Mountain Insurance Information Association (RMIIA), as of 2010 (the most currently researched year) traffic collisions cost nearly $1 trillion in loss of efficiency and human life. The average cost in auto insurance liability claims for property damage was $3,231 in 2013. The average claim for bodily injury was $15,443. That’s close to $20,000. Without liability insurance, this entire lump sum of money is coming directly out of your pocket. This is one reason why nickel and diming your auto insurance isn’t a wise strategy. You might think you’re saving money in the long run, but one wrong turn and you’ve lost all financial stability.
What happens if you’re hit by someone without insurance? You have to file a claim with your own company, paying all deductibles and figuring out how to make that new and more expensive monthly premium.
If you’re the victim in an accident, it’s not fair to have to pay for another individual’s poor choices. The National Highway Traffic Safety Administration (NHTSA) found that 26 percent of crash victims pay for their own motor vehicle costs when insurance doesn’t cover it. While people not involved in car accidents pay close to three-quarters of all crash costs. This is paid for through taxes and insurance premiums. Essentially, the public ends up paying for the uninsured motorist’s bills. The hikes in premiums and taxes can all be avoided if drivers followed the law and purchased an insurance plan. Getting liability insurance isn’t just financially responsible, it’s also live saving. While covering auto cosmetic costs, liability insurance also covers medical expenses and any loss of income for the victims. Hospital bills add up quickly, and when people can’t afford the care, there are severe ramifications. Liability insurance plans see to it that third parties injured in a crash are provided for.
The next time you find yourself asking, “what is liability car insurance” think of it as a life raft, protecting you from destitution and blameless individuals from a life of hardship. Want to see which insurance companies offer the best liability coverage insurance plans? Compare and shop auto policies with CoverHound today!