The minimum liability limit on auto insurance coverage is a figure determined by state law. Drivers must buy a policy with at least this level of protection to stay legal, and insurance companies must provide quotes to prospective customers which reflect it.
The specific type and level of auto insurance liability coverage required will vary, depending on the state. Bodily injury and property damage coverage are required in most states and in some jurisdictions, uninsured and underinsured motorist coverage must also be put in place.
Bodily injury liability coverage pays for damages incurred by the occupants of the other vehicle when a collision occurs. It pays for medical bills and rehabilitation services. It may also reimburse an accident victim for lost wages if he or she cannot work following the accident.
Property damage liability coverage is used to pay to repair the other driver’s vehicle following the accident. It also pays for repairs to other objects which have been damaged or destroyed, such as guard rails, fences, mail boxes, and sign posts.
Uninsured motorist coverage is required in some parts of the U.S. It pays for the policyholder and his or her passengers’ medical bills following an accident if the at-fault driver doesn’t have car insurance coverage in place. If the identity of the at-fault driver cannot be ascertained, the uninsured motorist protection is used to pay for damages.
Underinsured motorist protection is used to provide a higher degree of protection than the at-fault driver’s policy has available. The other policy is used to pay for damages first, and the underinsured motorist policy is used to pay the difference.