In the most basic terms, “liability” means that you are responsible for something that happened. If you’re driving a car, and you hit someone, you are liable, or responsible, for any of the damage you caused. The idea behind liability car insurance is that, if you hit someone with your vehicle, the insurance you have will pay for the damage.
Liability car insurance is one of the most common kinds of automobile insurance, and almost every state in America requires its drivers to carry it. There are two kinds of liability car insurance: 1) property damage; and 2) bodily injury. Property damage insurance covers the cost of repairs to the car or any actual property (i.e., trees, houses, fences) that you damaged in the accident. This insurance will cover you if someone else was driving your car at the time of the crash.
Bodily injury coverage takes care of the suffering caused to the person you hit, and that could take the form of lost wages, pain and suffering, and medical expenses. It will also cover any bystanders or pedestrians who were injured as a result of the accident.
If you are not the one who caused the accident, and you are not injured by it, your insurance does not pay out; the injured person who caused the accident will have to pay for damages through his or her own policy. Similarly, if you caused the accident that injured you, your policy will have to cover your expenses.
In many ways, you can choose how robust your insurance coverage will be; the more you want your policy to cover, the more expensive your premium will be. If you choose to meet only the bare minimum of coverage required by your state, you won’t pay much for the policy. You will pay a great deal in damages if you cause an accident because your liability coverage is low. If you can, try to get a policy with enough insurance to protect your assets and limit your liability in the event of an accident.