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Liability Auto Insurance

Auto insurance is an agreement between you and an insurance company. To get an insurance policy, a motorist must pay what is called a yearly "premium" to the insurance company. In exchange, the insurance company agrees to pay for specific types of financial losses when the insured motorist is involved in an auto accident. These financial losses include but are not limited to: property damage, medical coverage, and legal fees.

Driving without auto insurance is against the law. However, if you get caught driving without auto insurance, your license may be suspended, you could face severe fines, or – if you were to get into an accident while uninsured, you could potentially go to jail. Car insurance is necessary, and although we may get frustrated with having to pay for it, the fact is we need it. Car insurance is something that cannot be avoided.

The minimum auto insurance coverage varies from state to state. The bare minimum coverage is typically referred to as "liability insurance". This insurance covers the minimums for bodily injury and property damage.

There are three numbers that are used to describe an insurance policy’s limits. The first number refers to bodily injury limits. The second number refers to total medical liability coverage. The last number refers to property damage limits. For example, a 20/40/20 means the insurance company is responsible for: Twenty thousand for personal medical liability per individual, forty thousand maximum medical liability coverage per individual, and twenty thousand maximum property damage liability.

Bodily Injury Liability covers injuries that happen to you or any other individual who is involved in an accident when it has been determined that you are the at-fault driver. Usually, this also covers you while driving another person's car or when someone else is driving your car.

Property Damage Liability covers the cost of damage you cause to someone else's property in an accident when you are the at-fault driver. This coverage also covers someone else driving your car (with your permission). Property damage liability refers to damage caused directly to someone else's car and also covers damage to city property – such as light posts, telephone poles, fences, etc, and other structures such as houses, apartment buildings, etc.

Although liability limits vary from state to state, the minimum amounts are universally low. It is highly recommended a motorist purchase liability limits that are much higher than the state minimum in case a third party sues for amounts above and beyond the insurance policy's maximum coverage. Although purchasing the state's minimum liability insurance allows a motorist to legally register and operate a car, it is recommended the policy contains at least five times the minimum liability limits set by the state. This helps protect assets such as your personal savings, home equity, personal property, etc. Depending on total assets, a driver may wish to purchase even higher liability limits. You should check with a licensed insurance agent to determine the proper liability limits for your insurance policy. He or she can help you determine limits based on your assets and lifestyle.

Liability insurance can be costly for young drivers or for those drivers who have a poor driving record (accidents, speeding tickets, etc.) When acquiring insurance for a driver with a poor driving record, you should always check with your state's Department of Insurance. They usually have programs to help drivers purchase liability insurance at a discounted rate. For example, at the time of this writing, the State of California's Department of Insurance has a low-income liability insurance program that can be purchased for only $400 per year.

Article Source: http://www.articleresourceindex.com

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