Automobile Liability Insurance

Automobile liability insurance is financial protection for a driver who, while operating a vehicle, harms someone else or their property. Automobile liability insurance only covers injuries or damages to third parties and their property, not to the driver or the driver’s property. The two components of automobile liability insurance are bodily injury liability and property damage liability. Automobile liability insurance does not have a deductible.

Bodily injury liability of an automobile liability insurance policy covers an at-fault driver, so they don't have out-of-pocket expenses for others' emergency and ongoing medical expenses, loss of income and funeral costs. It also helps cover the policyholder’s legal fees when the accident results in a lawsuit. Property damage liability helps cover costs, such as repairing a home or retail establishment damaged by a vehicle crash and repairing the vehicles of other drivers involved in the accident. Automobile liability insurance has two limits for each of these components; one is per person and one is per accident.

Automobile liability insurance is required by state law, but each state sets its own minimum standards for how much coverage drivers are required to carry. For example, as of 2014 in New York, all drivers must have liability insurance that covers will pay at least $25,000 for injuries to one person, $50,000 for injuries to multiple people, $50,000 for death to one person, $100,000 for death to multiple people and $10,000 for property damage. In any state, drivers can purchase more liability insurance than the state’s required minimums, and it’s often smart to do so since medical bills can be very expensive.

For protection against damage to the vehicle itself from causes ranging from accidents to storms, auto owners can also purchase comprehensive insurance and collision insurance. Comprehensive insurance helps pay to replace or repair your vehicle if it's stolen or damaged in an incident that's not a collision. Comprehensive typically covers damage from fire, vandalism or falling objects (like a tree or hail). Collision insurance, meanwhile, helps pay to repair or replace your car if it's damaged in an accident with another vehicle or object, such as a fence or a tree. These two types of insurance are optional for vehicles that are owned free and clear. If the vehicle is financed, the lender may require this additional coverage. The lender wants to protect the vehicle’s full value since it serves as collateral for the loan.