Liability auto insurance coverage is put in place to shield the policyholder from being personally responsible for the damages he or she causes in an accident. It pays out on claims made by the occupants of the other vehicle when an accident occurs for their personal injuries and damage to property.
The part of the policy which pays for medical bills, rehabilitation expenses and lost wages is known as bodily injury liability coverage. It also pays out a funeral benefit in a situation where the accident resulted in one or more fatalities. In some states, accident victims can also make a claim for pain and suffering incurred as the result of an accident.
Liability insurance coverage is a legal requirement in a state which has adopted a tort system for car insurance purposes. The at-fault driver in a collision is responsible for paying the damages caused in the accident. If the level of coverage available under a liability policy is not high enough to pay for the damages caused, the at-fault driver is responsible for making up the difference personally.
Choosing the right level of protection for liability auto insurance coverage is an important part of buying a policy. In many cases, the minimum level of protection required under state law is not high enough to adequately protect a driver from having to pay for damage claims.