Whether you’re buying your first car, or just looking to change insurance plans, shopping for car insurance can be intimidating and complicated. There are many different kinds of coverage offered that are meant to protect you and your vehicle if you’re ever involved in an accident.
Understanding different car insurance coverages are important so you can choose what’s best for you.
Liability insurance is an insurance policy that covers another person and their vehicle or property if you cause an auto accident. This includes any medical bills or vehicle damage repairs you may be liable for.
2 types of liability insurance
There are two important aspects of liability insurance.
The first is bodily injury liability coverage, which covers any other driver’s medical expenses if you cause an accident. Simply put, this type of insurance covers the other driver’s injuries. For example, things covered by bodily injury liability can include X-rays, prescription pain meds, or treatment of injuries caused in the accident.
The other type of liability insurance is property damage liability coverage. This type of insurance covers any damage you cause to another person’s property. This can include their car or any belongings inside their car that were damaged in the accident.
What liability car insurance doesn’t cover
Liability car insurance covers the other driver’s expenses and vehicle repairs if you cause an auto accident. This means it does not cover your costs. Liability insurance excludes your medical bills, your car’s damage, and your passenger’s injuries. For this reason, it is important that you also get coverage for yourself and your vehicle.
The two forms of insurance coverage that protect you and your vehicle are comprehensive coverage and collision coverage. These types cover you and your car in the event of theft, a natural or weather-related accident to your vehicle, or an auto accident that is not your fault.
Do you need liability car insurance?
To put it simply — yes! Most states require a minimum amount of liability insurance coverage. There are only two exceptions to this: New Hampshire and Virginia. New Hampshire doesn’t require a liability insurance policy at all, as long as at-fault drivers can provide financial proof that they can pay for damages caused by an accident. Similarly, Virginia does not require liability coverage when drivers pay an annual uninsured motorist fee of $500 to the Department of Motor Vehicles.
Even though these states don’t require a minimum amount of liability coverage, it is still a good idea to explore your options for minimum coverage if you do cause an accident. If you live in any other state, you are required to have a minimum liability coverage plan.
Different liability coverage plans
There are different plans you can purchase to cover your liability insurance. The minimum amount of liability required by most states is also known as the “limit.” You can purchase extra coverage and exceed the limit, but you have to have at least the limit required by your state. This minimum coverage can range from a 10/20/10 policy to a 25/50/25 policy. Some states even have a limit of a 50/100/25 policy. It all depends on what your state minimum requirement for liability coverage is.
The plans are broken up into three parts of liability coverage. Each number represents the amount of coverage, in thousands, that are included for each part of liability insurance. The first number in the plan is the bodily injury liability limit (or BI limit) for one person injured in an accident. The second number is the bodily injury liability limit per car accident that you are in. The third number in the plan represents the property damage liability limit for any vehicles or property damaged in an accident.
Depending on different factors, you may want to invest in a larger or smaller amount of liability coverage.
What to do if you get hit by someone who doesn’t have liability insurance
If you get into an accident with someone who doesn’t have car insurance, this can cause all sorts of problems. Especially if you live in Michigan due to the high rate of uninsured or underinsured drivers, it’s important to prepare for the possibility of getting in an accident with someone who has no or very little insurance.
An uninsured or underinsured motorist coverage plan covers you in the event that you do get into an accident with someone who’s uninsured.
Typical cost of liability car insurance
The average cost of liability insurance is $611.12. There are a variety of factors that can influence how much you pay for liability insurance. For instance, with the number of accidents you have been in, your insurance costs may go up or down. There are also higher rates for students compared to the rates for adults, as students are younger and have been driving less.
What kind of car you drive can also affect your insurance rates. For instance, a reliable vehicle will likely have a lower insurance rate compared to a sports car. A car that is at a higher risk for theft may have a higher insurance rate than a vehicle with a lower risk of theft.
Other factors that determine your rates include your credit score, where you live in the world, the miles on your car, and your driving habits.
How to save money on liability insurance
Because of the different factors that can cause your liability insurance cost to go up or down, monitoring these is an easy way to save money on your coverage.
1. Don’t text and drive
Liability insurance goes up with the number of accidents you have been in, especially if they’re accidents you caused. One of the biggest causes of accidents is distracted driving, and in 2021, nothing is more distracting than cell phones.
The United States Department of Transportation reported over 400,000 injuries and 2,718 deaths related to texting and driving in 2018. If you can stay off your phone while you’re driving, you can avoid serious accidents that can result in harm to others and your liability insurance rates skyrocketing.
Being on your phone is also cause for a ticket in 48 states. So, avoiding your phone can also help keep your driving record clean and your rates low.
2. Don’t speed
Avoiding tickets can also keep your rates low. Staying under the speed limit, no matter how late you are for work, can help keep your record clean and help you avoid tickets.
Avoiding other kinds of tickets is also important. Be sure to keep up with your car’s inspection, license plate registration, and license renewal dates.
3. Drive safely
Driving safely and following the rules of the road can help you avoid car accidents, which is one way to keep your liability rates low. If you have been in multiple accidents that you are at fault for, don’t be surprised when your liability insurance rates skyrocket.
Insurance providers keep a close watch on your driving record, so keeping this clean can keep your overall car insurance rates low, too.
Which plan is right for you?
Each state has its own minimum requirement for liability insurance limits. But it’s not a bad idea to explore increasing these limits.
Insurance needs vary for everyone. If your car is ten years old and completely paid off, you probably won’t need as much insurance as a lease-holder with a loan on a brand new car. If your car’s make and model is reliable, you may want a lower insurance policy instead of a higher coverage policy.
When shopping for auto insurance, one of the most important strategies to remember is to look at all of your options. Insurance agents often won’t tell you upfront how they evaluate you and your car insurance needs. Because of this, you will have to explore many different options before deciding on an insurance plan that fits your life and your budget while also protecting you!
Liability insurance is what protects you and your vehicle if you cause an auto accident. It’s important to know what your state minimum requirement of liability insurance is so you can know which plan to get. From there, you can decide if you want to exceed the limit and purchase extra liability coverage as well.
Finding the best car insurance for you and your budget can be complicated, so Squeeze is here to help you find the best auto insurance!