What is collision car insurance

Your guide to liability insurance

There were around 6.7 million car accidents in the US in 2018, with an average insurance claim of nearly $ 16,000 for personal injury accidents, so the chances of being wrecked are very real - and potentially costly. Liability car insurance protects you and other drivers from the high costs associated with car accidents. Without insurance, most normal drivers would not be able to pay the property damage or hospital bills that can occur in a wreck.

There are two types of liability insurance - personal injury liability and property damage liability - and most states require at least one type, if not both. "Liability" means your responsibility in the event of an accident. If you are at fault in a car accident, your liability insurance covers hospital stays, medical services for the other driver, and repairs for the other driver's vehicle and all items. It can also cover legal costs related to the accident.

The liability insurance does not cover Your Injury or car damage. Depending on your state, your health insurance company can pay your hospital bills if you are at fault. Collision car insurance (additional coverage) can cover your car damage.

Let's look at the two types of auto liability insurance that are likely to be included in your auto insurance policy, how much auto liability costs, how to get liability insurance, and how much coverage you need. Even if you live in a state like New Hampshire (which most drivers don't require liability insurance), it is still wise to protect yourself proactively.

Liability insurance for personal injury

If you are responsible for a car accident, your liability insurance (or “BI” insurance) will cover the other driver's medical expenses. Depending on your coverage, emergency services, legal fees, lost income, pain and emotional suffering, and funeral expenses may also be paid for. Personal injury liability also covers injuries you cause while driving someone else's car.

Their policy describes the coverage per person and total cost. For example, you might have a 25/50 policy that pays $ 25,000 per person and up to $ 50,000 per accident.

In about a dozen “no fault” states, an insurer usually compensates its insured injured party, regardless of who is to blame. Normally, every driver in these states must take out personal injury protection (PIP) or fully comprehensive insurance. Depending on your state, you may also need to have uninsured drivers insured, which will protect you if the other driver doesn't have auto liability insurance.

Liability insurance for property damage

Auto Property Damage Insurance (also known as "PD Cover") covers minor and significant damage to someone else's property - whether it's a vehicle, house, or tree - that you have caused.

Your coverage will likely be listed as a series of three numbers. Following the same pattern we mentioned above, your full liability policy can be 25/50/20. You have personal injury coverage of $ 25,000 per person, $ 50,000 per accident, and property damage insurance of $ 20,000.

How much does liability insurance cost?

Combined physical and property liability insurance for a vehicle averaged between $ 304 and $ 964 per year between 2013 and 2017, with costs varying widely from state to state. An insurance company takes into account your age, your accident and driving history, the amount of coverage, the driver and the location-related factors. For example, younger drivers tend to pay more because they are more likely to behave risky. Younger drivers aged 16 to 19 are almost three times more likely to have a fatal accident than drivers aged 20 and over.

Florida is the most expensive state for liability insurance, with drivers paying an average of $ 964.28 per year. North Dakota is the cheapest state for liability insurance at $ 303.66 per year, less than a third the cost of Florida.

How Much Coverage Do I Need?

There are several ways to help you decide how much liability insurance you need. If there is a court ruling for more than your coverage, you will be responsible for anything that your insurance policy does not cover. Your personal savings account or even your home could be at risk. Here are some options:

Enter the minimum coverage: The minimum requirements for liability insurance vary in each state. For example, in Louisiana, drivers must have a minimum liability limit of 15/30/25 - they pay $ 15,000 per person for personal injury, $ 30,000 per accident, and $ 25,000 for property damage California, with only $ 5,000 required for property damage.

While minimum insurance could lower your annual insurance costs, in the long run you could pay more in the event of an accident. For example, if you have a family of four, the entitlements would be $ 10,000 per person for $ 40,000. That's $ 10,000 more than your $ 30,000 California insurance would cover.

Reporting based on statistics: The average personal injury claim was nearly $ 16,000, while the average property damage claim was close to $ 4,000, according to Insurance Information Institute statistics.You might consider buying enough to cover at least that much. However, some insurance companies and consumer groups recommend a minimum of $ 100,000 for personal injury and $ 300,000 per accident.

Asset-based coverage: Some claims can be higher than the "average" - and outlier claims and court rulings can be much, much higher. Some insurance companies suggest buying a policy that covers your assets and a little more. When calculating your net worth, consider your home, cars, savings, investments, and debts.

"It comes down to finances and how much you talk about protection," said Taylor Green, an Austin-based insurance agent for State Farm. Green recommends finding a policy that covers two to three times your net worth or annual income, or an additional $ 1 million "umbrella" policy for high net worth individuals.

An umbrella liability policy covers expenses in excess of your auto liability insurance coverage and helps you avoid loss of assets or income. Umbrella policies typically start at $ 1 million, and insurers often require a certain amount for auto and home insurance first.

How to Buy for Liability Insurance

You can search for auto insurance through insurance websites. Or use word of mouth or online reviews to find a reliable, experienced insurance broker or independent agent.

Find a broker or independent agent who represents consumers and helps them choose between multiple insurance companies, rather than a “captive” agent who represents just one insurer. Request at least three to five insurance quotes. Insurers can offer different prices depending on the vehicle and personal profile.

Remember, cheaper doesn't always mean better. "You ultimately acquire the ability for your insurance company to settle a claim," said Green. “Will they pay their claims? Who will they cover? This is paramount when it comes to cost versus coverage. "

Call the local auto and body shops to find out which insurers are easier to handle than the ones that save on claims and repairs, Green said.

Bottom line

When buying car insurance, you are asking about the best deals that you need and can afford. While liability insurance can be expensive, it doesn't automatically settle for the bare minimum. Consider purchasing the industry recommended coverage ($ 100,000 personal injury liability per person; $ 300,000 per accident) or at least enough to cover the cost of the average personal injury claim (approximately $ 16,000) and the average property damage claim ( 4,000 USD). Paying a little more for coverage can protect you from much larger medical and property damage bills in the long run.