Liability insurance is coverage that protects you financially against the injuries or damages that you cause to another person or that person’s property. Liability coverage is essential to protecting your personal assets against lawsuit, and with regard to auto insurance, it is mandatory. However, not all liability coverage is the same, and what you don’t know about liability insurance could ultimately cost you.
How Much Liability Coverage Do You Need?
The amount of coverage you need depends on the value of your assets and the state in which you live. Each state in the U.S. has varying minimum requirements for auto liability coverage. In order to operate a vehicle, you need a specific amount of coverage for property damage, individual bodily injury costs and total accident bodily injury coverage. Driving with less than the minimum coverage is illegal and may result in loss of your driver’s license, fines and even jail time.
If you live in a state with very low liability minimums, you will probably need to invest in more coverage than the minimum. Just because your insurance limits are reached, it does not mean that you are not legally liable for the remaining damages and injury you cause to another person. Once your insurance coverage limits are met, an accident victim may pursue you in court for seizure of your personal cash and assets to help pay for damages.