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What is Auto Liability Insurance?

It is a fact of life that every second we spend driving a vehicle, no matter how responsibly we may behave, we run the risk of taking part in an automobile accident. Even if no criminal charges are ever filed, we may be found liable for damages incurred during an accident. It may not have been our fault but unless a court of law agrees we could very well be legally bound to reimburse a third party for property or bodily damage. Potential damages unfortunately, are impossible to assess. They can range from a new taillight in the case of a mild fender bender to complete restitution to the state for a damaged telephone pole and to the telephone company for business lost during the time period in which the pole was out of service. Auto Liability Insurance takes care of these third party damages for which the driver has been found liable.

Liability insurance is an added expense. In this volatile financial climate, why would we truly need it? First and foremost, we may not have a choice. Many states require, by law, that vehicle owners have a minimum coverage for bodily and property damages via liability insurance. Looking past that, however, the basic idea remains that we are only in control of our future to a certain extent. Beyond that we are at the mercy of circumstance and other people. There is no way to determine what could happen or if we could afford it. Auto Liability Insurance offers us the security that no matter what may happen we are covered financially.

There are generally two kinds of liability policies. The first kind, combined single limit, covers damage to both body and property under one policy. This means if the policy’s limit is $100,000 dollars then it will cover both kinds of damages, combined, for up to but not more than that set amount. The second kind of policy is a split limit. As its name implies, this one covers body and property damages separately and has different limits for each. Thus, a split limit policy might cover up to but not more than, for example, $50,000 dollars in bodily damages and $25,000 dollars in property damages for the same accident. It is not uncommon for some insurance policies to further split the body coverage into damages to a single person and damages to every person involved. This means a policy advertised as 50/100/25 would cover up to $50,000 dollars for bodily damage to a person, $100,000 dollars for totally bodily damages to every person involved and $25,000 dollars for property.

Of course, the higher the limits are the more expensive the premiums tend to be. It is up to each of us to find the balancing point between how much coverage we want and how much we can afford. If we can afford higher limits, however, there is generally little reason to settle for less.

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