How Does Auto Liability Insurance Work?

Auto Bodily Injury Liability Insurance

The first kind of auto liability insurance is for bodily injury. You are required by law to have this in most states. If you hurt someone in an auto accident your bodily injury auto liability insurance will cover their medical bills and lost wages.

Auto Property Damage Liability Insurance

The second kind of auto liability insurance is for property damage. You are required by law to have this in most states. If you damage someone's property in an auto accident your property damage auto liability insurance pays to repair the damage. It also pays for your legal bills and any settlement if you are sued for the accident.

Auto Bodily Injury Liability Insurance Limits

When you purchase auto bodily injury liability insurance you must choose two limits. The first is the amount your insurance company will cover for each person you injure in an accident. The second is the amount your insurance company will cover for each occurrence. That means no matter how many people you hurt in an accident your insurance company will only pay up to that amount.

Auto Property Damage Liability Insurance Limit

Your auto property damage liability insurance policy will pay for damages to other peoples property up to the limit. This limit is often the same as your comprehensive limits and collision insurance limits. It may be listed as simply "property damage" on your insurance policy.