Why do I Need Liability Insurance?
Most states require that drivers carry liability insurance. By law, you don’t have to have any additional coverage but liability is mandatory. You may wonder why the laws are so strict.
Liability insurance is meant to protect the other driver as well as yourself if you are at fault in a crash. It covers bodily injuries, paying lost wages as well as medical bill. It will pay to replace or repair any property you involved in the collision, such as damaged fences or even houses and outbuildings. The third part of liability covers punitive damages, often referred to as “pain and suffering” if the offended party should sue you.
However, your car insurance will only cover expenses up to the amount you’ve purchased (or less, for example for vintage car insurance). If the damages in an accident total $75,000 and you only bought $50,000 of liability coverage, you are responsible for the excess expenses. Not having enough liability insurance could affect you the rest of your life. A court award exceeding your limits of liability will be a legal obligation that can’t be discharged through bankruptcy or even death, as the plaintiff is entitled to sue your estate for uncollected damages.
Most state laws require far less liability insurance than you should reasonably have. In our litigious society, it’s always better to have insurance and not need it, than need it and not have it! The Insurance Information Institute has recommended that you carry at least one hundred thousand dollars for bodily injury protection per person and three times that per accident.