Auto liability coverage is the part of your personal auto policy that provides protection against others’ claims due to bodily injury/death and property damage to other parties. This also includes defense and settlement costs of claims.
Most policies include a single limit, or maximum amount of damages paid for each accident, no matter how many individuals are injured or how much property is damaged. Another typical expression is a split limit. An example of a split limit would be 100/300, meaning that your insurance will pay up to $100,000 per individual injured, up to a total of $300,000 for all individuals injured. Split limits can be used to express maximum amount of damages paid: (1) per individual injured, (2) in total for all individuals injured, (3) for all property damage. Property damage coverage is typically less than coverage for injured individuals because medical costs can be significantly higher than property repair/replacement costs.
Most states have compulsory liability insurance laws which set a required minimum amount of coverage (expressed as split limits) that policyholders must possess. These minimums are enforced with financial responsibility laws that levy fines or other penalties for individuals who fail to satisfy their requirements. Minimum coverage and applicable fines/penalties vary by state. Most “basic limit” policies that insurance companies offer satisfy these minimum requirements, with higher levels of coverage available for increased premiums.
It is important to look over your current or any prospective auto insurance policy to understand what is covered and what is not. Often, many exclusions apply including intentional damage/injury, some vehicles used for business purposes, and losses/damages/injuries that are covered under other policies.
Additional coverage can be added by either increasing coverage through an endorsement or adding a personal liability (umbrella) policy. An umbrella policy provides additional liability coverage to supplement homeowners and auto insurance policies. These policies are relatively low-cost and are recommended to wealthier individuals who bear much higher liability risks.