When it comes to protecting yourself from the financial costs of a car accident, liability coverage is one of the most important coverages. Liability coverage pays for injuries to other drivers, passengers and other people who are not in your vehicle during an accident. Liability insurance is required by law, and will help pay for those damages if you get sued after an accident.
In this post, we find out What Is The Recommended Liability Coverage For Auto Insurance, recommended car insurance coverage consumer reports, auto insurance coverage limits explained, and how much property damage car insurance do i need.
What Is The Recommended Liability Coverage For Auto Insurance
Liability coverage is one of the most important coverages on your auto insurance policy. Liability insurance is required by law and will help protect you if you get sued after an accident. It pays for injuries to other drivers, passengers and other people who are not in your vehicle during an accident.
Liability coverage is important and it is one of the lowest priced coverage you can purchase.
Liability coverage is important and it is one of the lowest priced coverage you can purchase. Liability insurance covers injuries caused to others and damage to their property in an accident that you are at fault for. This includes medical bills, repair costs, and compensation for pain and suffering. Liability coverage protects you from lawsuits and financial loss if someone is injured in an accident that was your fault.
If you do not have enough liability coverage then your insurance company will pay any claim that exceeds your limits of liability coverage (the amount set by law in each state). You could be responsible for paying these additional expenses out-of-pocket if they exceed the limits set by law in each state or if there are no other sources of payment available such as uninsured motorist protection or underinsured motorist protection (UMPD).
Bodily injury per person: This will pay for a single persons medical expenses after an accident.
The bodily injury per person coverage is important because it will pay for medical expenses related to your injuries. This is one of the lowest priced coverage you can purchase, so it’s a good idea to make sure that you have this type of coverage. The amount of money that you need depends on your state and how much liability coverage you want to have in place. In some states, it’s required by law to have this type of insurance; otherwise, if someone gets hurt in an accident and sues you for their injuries, then they could end up taking all of your assets if they win the case against you.
Bodily injury per accident: This will pay for every person that was injured in the accident.
Bodily injury per accident: This will pay for every person that was injured in the accident. You can purchase varying amounts of bodily injury coverage, depending on how much protection you wish to have. If you have no idea how much this type of insurance should cost and what kind of limit you should get, talk with a local agent about your options. They can help guide you through the process and find out what amount would be best for your situation.
Property damage: This coverage will pay for any damage done to someone else’s property during the accident.
Property damage: This coverage will pay for any damage done to someone else’s property during the accident. If you are at fault, your insurance company will pay for the damage to your car and any property that was damaged.
If you’re looking for a way to save money on your auto insurance, or if you want to be prepared in case of an accident, liability coverage is one of the best places to start. Liability coverage will pay for medical expenses after an accident and it has no deductible. This means that if someone gets hurt in an accident where you’re at fault, your liability coverage will pay out their medical bills without requiring you to spend anything.
It’s also worth noting that this type of coverage only applies when there are multiple parties involved in the incident—if they’re all driving separate cars, each driver would have their own personal injury protection (PIP).
recommended car insurance coverage consumer reports
Insurance isn’t the most exciting facet of car ownership, but it is one of the most important. Not only is your policy designed to protect you from financial calamity in the event of a collision or related injury, it is required by most states if you own a car. Consumer Reports recommends shopping around for the best policy, not only when you buy a car, but periodically, to make sure you’re always getting the best deal possible.
Through a member survey, CR has identified the insurance companies that offer the best service with the most competitive monthly premiums. But there are a number of factors to consider as you shop for an auto policy. For starters, it helps to understand what attributes insurers consider when they formulate your monthly premiums, including the following factors:
Driver profile: Age, driving experience, and driver history all influence the cost of your premium. Accidents, traffic violations, or the addition of a teen driver can raise the cost of your policy, because the insurer puts you in a higher risk category.
Car type: In general, the more expensive the car, the higher the premium, because expensive cars cost more to repair and replace. High-performance cars also increase the cost of insurance, due to the increased risk associated with owning a faster car.
Credit history: According to Experian, a credit reporting agency, most states allow insurers to calculate auto premium rates based on a customer’s credit score. Insurers maintain that credit history is a good predictor of risk that they’ll have to shell out for insurance claims, and they price their policies accordingly. California, Hawaii, Maryland, Massachusetts, Michigan, Oregon, and Utah restrict or prohibit credit-based insurance scores, but in other states, lowering your credit score can help you get a better rate.
External conditions: Local weather trends, traffic conditions, and other factors that increase the likelihood of claims result in higher rates. For example, if damaging storms in your area have generated lots of car-insurance claims, your company may apply to your state’s insurance regulator for an across-the-board rate increase to reflect its increased exposure to that risk. Customers in areas with higher rates of collisions are also likely to pay more.
Loyalty Doesn’t Pay
It is a common misconception that insurers reward customers for sticking around. Our recent survey of Consumer Reports members shows that you can save money by shopping around for a better rate from time to time. Twenty-three percent of the members we surveyed told us they’d switched insurers in the past five years. Among those, 63 percent said they’d found a better price, and 78 percent said they were highly satisfied with their new carrier.
“Price optimization” can be another reason to shop for a new insurer every few years. With the exception of California, Florida, Ohio, and Maryland, most states allow insurers to engage in this controversial practice, which allows them to raise rates for reasons that aren’t related to increased liability risk. The bottom line is that if an insurer figures you aren’t likely to jump ship to another carrier, they may raise rates just because they can, costing you extra money.
Factor in Life Changes
If you get married, add a teen driver to your policy, add or remove a vehicle, or the distance of your commute changes—as it did for many people during the pandemic—ask your insurer how much the changes will cost or save you, and shop other insurance policies to see which carrier can give you the best rate. Also, remember to ask for an adjustment to your coverage to reflect your car’s depreciation; insurers don’t necessarily do that without your prodding.
For a comprehensive list of insurers that may not be visible with a simple Google search, consult CR’s car insurance ratings.
Pick a Top-Rated Insurer
Securing a lower premium is important, but it’s not everything. Find a carrier that, in addition to competitively low premiums, provides fair and fast claims settlements, offers great customer service outside of claims, helps you review your policy thoroughly, and proactively offers help and advice.
CR rates insurers based on member feedback on the cost of their premiums, the ease of processing claims, the quality of non-claims-related customer service, thoroughness of policy review, clarity of policy coverage, and proactive help and advice. To create our ratings, we surveyed 56,396 CR members in the fall of 2020 about their car insurance. They provided us with 67,185 reports on their experiences with car insurance companies they did business with between 2016 and 2020. (CR members’ experiences are not necessarily representative of the U.S. population.)
Don’t Skimp on Liability Coverage
Most states require drivers to have at least minimum coverage, but it’s a good idea to bolster your coverage beyond these minimums if you can afford to do so.
Liability insurance: This covers bodily injury and property damage caused to another party in a crash. Experts recommend buying more than the legal minimum even if you don’t have much in assets to protect. Depending on your state, a portion of your wages could be garnished in a judgment against you. A more protective level of coverage is $100,000 per person, $300,000 per incident, and $100,000 for property damage. Robert Hunter, the insurance director at the Consumer Federation of America (CFA), says that an umbrella liability policy extends coverage for both your car and home, and it offers additional protections as well. Those policies usually up the per-person coverage to $300,000.
Low-limit coverage: Douglas Heller, an insurance expert with CFA, says that although they offer better protection, umbrella policies and policies with higher liability limits can be difficult for lower income drivers to afford. Currently, only three states—California, Hawaii, and New Jersey—offer subsidized insurance coverage for lower income drivers. Heller says that having low-limit liability coverage is better than going without insurance, or simply not driving, which can cut people off from economic opportunity.
Uninsured motorist coverage: In many states, this coverage is optional, but according to the Insurance Information Institute, 1 in 8 drivers don’t carry car insurance. That’s a statistic that has remained fairly constant for more than two decades, making uninsured motorist coverage a worthwhile buy, even if it’s not required. This coverage pays medical bills for you and your passengers after a crash caused by an uninsured, at-fault driver. Why get it in a no-fault state, where your company pays regardless of who’s at fault? Because it reimburses for lost wages after a crash. Uninsured insurance also covers you and your household as pedestrians, and in hit-and-run crashes. Heller says you want to get at least as much coverage for yourself as you would get for others involved in a crash.
Underinsured coverage: More motorists are opting to carry only minimum liability coverages in order to save money. Underinsured coverage protects you if you get into an accident with someone who doesn’t have enough insurance to cover the cost of injuries and property damage.
Seek Savings on Other Coverages
Collision insurance, which pays for crash damage, and comprehensive insurance, which protects against vehicle theft and damage caused by storms and such, are two coverages you may be able to whittle down in order to reduce your premium. You also may be able to forgo other coverages to save even more money.
Adjust your deductible: Raising your comprehensive and collision deductibles from $500 to $1,000 can shave 11 percent off your premium on average, says CFA’s Hunter. Just make sure you can afford to pay the extra out-of-pocket cost if you’re unfortunate enough to get into a crash.
Older cars don’t need extra coverage: Consider dropping collision and comprehensive coverage when your annual premiums equal or exceed 10 percent of your car’s book value. Otherwise, you could end up paying more over time than you would recoup for repair or replacement of your damaged, stolen, or totaled vehicle. (If you have a car that is appreciating and is old enough to be considered a classic, and you don’t drive it to and from work and most errands, there are classic car policies that insure your car for an agreed-upon value based upon its collectability and other factors.)
Drop rental reimbursement coverage: If you have another car you can use while your vehicle is being repaired, you don’t need to buy this coverage. You can also skip roadside assistance coverage if you have an auto-club membership that’s a better deal, or if roadside assistance comes as part of your car’s warranty.
Review personal injury protection and medical payments coverage: If you already have good health coverage you don’t need it through your auto policy. Keep the coverage if you don’t have health insurance, or if your usual passengers might not be well-insured.
Actively pursue discounts: They can include breaks for bundling home, auto, and umbrella policies with the same carrier; taking a safe-driving course; letting your carrier know about your lower annual mileage; and reporting your teen driver’s good academic average, typically a B or better.