Understanding Coverage: Part 1 — Liability
If your vehicle is in a collision that causes injury or damage, here's how auto insurance protects you.
Accidents happen, but where does your coverage for an accident begin and end? The answer depends on the type of auto insurance you have.
ARE YOU COVERED?
Typically, auto insurance policies and state laws require some liability coverage for the following (1):
Bodily Injury (BI):
Applies if you (the policyholder) are at fault in an accident and injure another person. Bl can cover medical and funeral expenses, pain and suffering, and more. These could be out—of—pocket expenses if you don't have adequate coverage.
Property Damage (PD):
Covers damage, up to its limit, to another person's property if you're at fault in the accident.
Uninsured/Underinsured Motorists (UM/UIM):
Pays for your injuries if someone with zero or inadequate coverage crashes into you. In some states, it could also cover damage to your vehicle. (1)
COVERAGE BY THE NUMBERS
If you have split limit liability coverage, it will look something like 250/500/100. Let's break that down.
- $250,000 covers bodily injury per person.
- $500,000 covers bodily injury of all people involved. People injured = $500,000 max paid out.
- $100,000 covers damage to other vehicles and property
Or, instead of split limits, your liability coverage may be a Combined Single Limit (CSL). CSL simply states a single dollar limit that applies to any combination of BI and PD liability claims. While $300,000 is a starting point, it’s a good idea to have as much coverage as you can afford.
- Coverage may vary by state and policy.