How does auto liability work? - Bankrate.com

Car insurance companies offer several coverage types. Liability is one of the most important. If you cause an accident, your liability coverage is the portion of your policy that pays for the damages and injuries to the other party. Because car accidents can lead to expensive medical costs and vehicle repair bills (and sometimes even lawsuits), having proper liability coverage is critical to protecting your financial health.
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Most states require drivers to carry at least minimum amounts of liability coverage. However, state minimum limits are often relatively low and may not provide enough protection. Although minimum limits could keep your premium down, you could be hit with sizable out-of-pocket expenses if you cause an accident and the damages exceed your insurance limits. Bankrate investigated the average cost of various liability limits to help you decide if the added expense of higher limits is worth the extra coverage.
How much auto liability coverage do you need?
You will have to buy at least your state’s minimum liability limits to drive legally in most states (not including New Hampshire or Virginia), but is that enough? Although lower limits generally mean a lower premium, purchasing state minimum limits can leave you more financially exposed. If you cause an accident, your insurance will only pay up to your policy amounts. Lower limits are exhausted more quickly, potentially leaving you with...



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