Auto Insurance Series - LiabilityThe main component of all auto insurance is liability.

Auto insurance is something that you need to have if you own a vehicle. Many of us have insurance and never use it, but it is a necessary evil as a vehicle owner. Understanding auto insurance can be confusing, but it doesn’t have to be. This series of articles is going to break down auto insurance so it is easy to understand and you will  know what is covered.

Liability coverage pays for losses you cause to others. This would include your vehicle hitting another vehicle, your vehicle hitting a fence, and your vehicle hitting a person.

The state you live in mandates the amount of liability you are required to have to be considered legal by those standards. In Connecticut for example, you are required to carry liability insurance at $20,000 per person and $40,000 per accident with $10,000 in property damage. What does this mean?

The figure of $20,000 is the most that your insurance will pay to one person in the accident for any injuries, $40,000 is the most they will pay for one accident.

So, let’s say that you were at fault in an accident, and three people in the other car were hurt. The driver is injured, and $20,000 will take care of their needs. The front passenger is injured, but only requires $15,000 in damages. The last passenger has injuries totaling $10,000. At this point, the total injuries are $45,000, but you only have $40,000 for the whole accident. You are now responsible for that other $5,000 in damages to the last passenger.

And, $10,000 in property damage is not much either. Imagine hitting someone driving a brand new BMW or Lexus. That amount won’t get them very far if their vehicle is totaled!

While going with the minimum requirements is less expensive, it can leave you with a major financial problem if the above scenario happens.

Your best option is to speak to an insurance agent or a company representative and let them help you figure out how much coverage you need. Based on your personal circumstances, you may want to purchase higher limits of insurance to properly protect yourself and your assets.

The scenario above happens everyday in our society, and with the cost of vehicles and medical care going higher each year, it is imperative to protect yourself from potential liability.