Automobile liability insurance is financial protection for a driver who, while operating a vehicle, harms someone else or their property. Automobile liability insurance only covers injuries or damages to third parties and their property, not to the driver or the driver’s property. The two components of automobile liability insurance are bodily injury liability and property damage liability. Automobile liability insurance does not have a deductible.
Bodily injury liability covers an at-fault driver so they don’t have out-of-pocket expenses for others’ emergency and ongoing medical expenses, loss of income and funeral costs. It also helps cover the policyholder’s legal fees when the accident results in a lawsuit. Property damage liability helps cover costs such as repairing a home or retail establishment damaged by a vehicle crash and repairing the vehicles of other drivers involved in the accident. Automobile liability insurance has two limits for each of these components; one is per person and one is per accident.
Automobile liability insurance is required by state law, but each state sets its own minimum standards for how much coverage drivers are required to carry. For example, as of 2015 in Texas, all drivers must have liability insurance that covers will pay at least $30,000 for injuries to one person, $60,000 for injuries to multiple people, and $15,000 for property damage. In any state, drivers can purchase more liability insurance than the state’s required minimums, and it’s often smart to do so since medical bills and auto body repair costs can be very expensive.
In general terms, auto liability insurance is designed to pay for the people and things you hit with your car up to the limits of liability that you carry on your auto insurance policy. Your auto liability insurance will keep you from having to pay out of pocket. Keep in mind that you are responsible for all damages over and beyond the coverage you have on your policy.