Auto Liability Insurance 101

As a responsible car owner, it is important to understand the different types of car insurance coverage available to you. One of the most important coverages is auto liability insurance, which protects you financially if you are found to be at fault in an accident.

Auto liability coverage is divided into two parts: 

Bodily injury liability: Bodily injury covers the medical expenses, lost wages, and damages suffered by the other party in the accident.

Property damage liability: Property damage covers the cost of repairing or replacing the other party’s vehicle or other property that was damaged in the accident. 

When you look at your insurance policy, you will see your liability coverages displayed in three numbers like so: 100/300/100. If you are at fault in an accident, the first number($100,000) is the maximum amount your policy will pay per person for medical bills caused by the accident. The second number($300,000) is the maximum amount your policy will pay for the cumulation of all medical bills per accident. This number comes into play if there are multiple people injured in the accident. The last number($100,000) is the maximum your policy will pay for property damage. Here in Missouri, our state minimums are 25/50/25. Do you think this is enough coverage? Let’s put those numbers into perspective to find out. Let’s say you cause an accident that totals an $80,000 truck and puts the driver of that truck in the hospital with a $35,000 medical bill. If you have state minimum liability insurance, the maximum amount your policy will pay to replace that truck is only $25,000 (property damage limit). After that, you have to foot the bill for the remaining amount. Not many of us have an extra $55,000 lying around! To add to that, your policy will only pay $25,000 toward that $35,000 hospital bill (bodily injury per person limit). This means you are also on the line for the remaining balance due to the hospital. If you are unable to pay these bills outright, your wages may be garnished.

For most of us, the state minimums in Missouri are not enough coverage. Our job as your insurance advisor is to make sure that you are covered in a way that will restore you financially after an accident. We recommend that our clients keep at least 100/300/100 auto liability insurance. When choosing your liability limits, it is important to consider your personal assets and the potential financial impact of an accident. If you have significant assets, you may want to consider higher liability limits or adding an umbrella policy to protect yourself in the event of a lawsuit. 

It is important to note that liability coverage only covers damages suffered by the other party, not your own damages. To protect your own vehicle and yourself, you may want to consider additional coverages such as comprehensive coverage, collision coverage, and medical payments.

If you live in Missouri and you are on the hunt for car insurance, we’d love to chat with you and provide a free quote. You can get the process started here, or give us a call.

-Theobald Insurance Group

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