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Liability Auto Insurance: What Does Your Policy Include Exactly?

Updated: April 14, 2018

A lot of people get confused when they look for car insurance policies, because there are so many different sections to these policies.

Auto insurance policies typically include liability auto insurance, comprehensive auto insurance and collision auto insurance coverage.

When it comes to liability auto insurance, most car owners do not have a choice about whether they can get this type of coverage.

Most states in American make it mandatory for individuals to have at least the cheapest liability auto insurance that is legally allowed.

This ensures that everyone on the road is protected if a driver makes a mistake that causes an accident.

What is Liability Auto Insurance?

Liability auto insurance is the part of a car insurance policy that is there to protect everyone else that is driving on the road. A lot of people mistakenly think that the minimal level of liability insurance they purchase is designed to protect them.

In some ways, having the cheapest liability auto insurance does benefit the policyholder too.

In truth, this policy is there to make sure that if a driver makes a mistake while on the road and gets into an accident, their liability insurance will pay for the damages and medical expenses for the other party in the crash.

In some ways, having the cheapest liability auto insurance does benefit the policyholder too. This is because they do not need to worry about paying for another person’s car damage and medical expenses out of pocket.

It is not possible to get a car insurance policy without some form of liability insurance, unless you live in a no-fault state, because state governments make it legally mandatory.

There are different levels of liability coverage available, with the change usually coming in the form of the maximum payouts made by the insurance company in the event of an accident.

How Much Liability Auto Insurance Can You Get?

There is a minimum floor for liability auto insurance in every state, and no policy can go below that level if it wishes to remain legal. This means that the cheapest auto liability insurance will vary from one state to another.

While the minimum levels exist in most states, this does not mean everyone has to get that level of liability insurance.

For example, one state may require that drivers get liability auto insurance that pays out at least $20,000 for medical expenses to all passengers in the car that was not at fault for the accident. The policy must also pay at least $5,000 for damages to that vehicle.

While the minimum levels exist in most states, this does not mean everyone has to get that level of liability insurance. It is possible to get more insurance if you can afford to pay higher monthly premiums.

Getting a higher level of liability auto insurance is advantageous for both individuals and businesses because it gives them further protection against out of pocket expenses if they cause a car accident.

When considering the level of auto liability insurance for your policy, it is necessary to conduct a cost vs. risk analysis.

How Much Liability Auto Insurance Do You Need?

A cost vs. risk analysis helps someone understand how much liability auto insurance they need. Someone who is reasonably wealthy may want to get the best liability car insurance available, because it would almost completely protect them from out of pocket expenses.

The last thing you want to do is get a high liability insurance policy that has expensive premiums, only to find yourself unable to keep up with those premium payments.

In contrast, someone who is only making minimum wage and needs to drive their car to work would go for the minimum level of liability coverage, because they cannot afford a better policy.

The last thing you want to do is get a high liability insurance policy that has expensive premiums, only to find yourself unable to keep up with those premium payments.

As mentioned earlier, most states make it legally necessary to have some form of liability auto insurance. Anyone who drives without this coverage is in danger of getting fines or having their license suspended if they are caught.

Individuals may also want to get other types of insurance, such as comprehensive and collision auto insurance, which drives up the price of their policy. It is better to have a well-rounded policy than one which only has a high amount of liability insurance.

Other Types of Cheap Car Insurance

Aside from liability auto insurance, individuals are also allowed to get comprehensive or collision auto insurance coverage.

Businesses will often go for even more auto insurance, because they want to protect their interests.

Collision coverage will protect the insured individual’s vehicle if is damaged in an accident that was their fault. This is especially useful for people who have cars with a high value, because it saves them from paying a lot of money for repairs after an accident.

Comprehensive coverage is also important for those who can afford the policy, because it means the insurance company will pay for damage to the car that occurs when it is not being driven. For example, events such as theft or natural disasters fall under the comprehensive coverage umbrella.

Businesses will often go for even more auto insurance, because they want to protect their interests. Some businesses get umbrella liability coverage, which protects them for amounts of up to $1 million resulting from the negligence of their drivers when out on the road.

Auto insurance policies also have options for personal injury protection and roadside assistance coverage.

Getting the Cheapest Liability Auto Insurance

The best way to get a cheap car insurance policy is by speaking with companies that service your state about the minimum level of liability coverage they provide. If you simply cannot afford to pay more for insurance, you can skip comprehensive and collision coverage.

The cheapest liability insurance policy may not protect you or your vehicle from damage that you cause, but it will ensure that the vehicle is legally allowed on the road.

Statistics show that the average price for auto insurance in the United States is $600 per year – if you are only getting the minimum level of liability coverage mandated by your state.

If an individual also adds some level of comprehensive and collision coverage, this cost can rise to $1200 a year.

The cheapest liability insurance policy may not protect you or your vehicle from damage that you cause, but it will ensure that the vehicle is legally allowed on the road.

At the end of the day, it is better to have some form of liability auto insurance instead of having no insurance. Not only are you protected legally, but you also ensure that you do not face thousands of dollars in out of pocket expenses if you cause an accident and injure another person, or damage their vehicle.