If you ask an insurance agent to explain all the options in auto insurance coverage, one that you will hear about is liability coverage. The agent might start the conversation with a description of what this is and why you need it. While liability coverage is probably the most basic form of protection you can buy with auto insurance, it is also one of the most necessary types. Here is an explanation of what it is, how it works, and why you need it.
What It Is
Liability insurance is one of the most affordable coverage options you can add to a policy. You can even purchase it alone, too. The primary purpose of liability protection is to protect your finances if you cause a collision that affects other cars and people. The other purpose of it is to provide financial compensation to other people affected by the accident you caused. Liability insurance does not give you money after an accident, which may seem odd to you. It is not designed to cover damages you incur when you cause an accident. It is only for damages to other people affected by your actions.
How It Works
If you rear-end a car or cause any other type of collision, the other driver can file a claim against your liability insurance policy. When your insurance company receives the claim, they will investigate it. If they agree with the claim, they will pay the other driver for the damages they experienced from your actions. You will not receive a check from your insurance company for damages to your vehicle. You also will not receive a bill in the mail from the victim of the accident, asking you to cover the costs of repairs.
Why You Need It
You need liability coverage for three main reasons. The first reason is to meet state guidelines. Almost all states require liability coverage protection from all drivers. Two, you need it to protect your assets and finances. If you don't have it, a victim can sue you for your things. Three, you need it to avoid coming up with the money to pay for damages you may cause to other cars.
You can opt out of other auto insurance types, but you should never opt out of liability insurance with your auto insurance plan. If you have questions about the costs of liability coverage, talk to an auto insurance agent in your city.