If you have any experience with purchasing auto insurance, you will certainly understand that Bodily Injury Liability coverage is probably the most important coverage in your policy.
Many car insurance shoppers fail to understand how important bodily liability coverage is and how it mitigates your risk of expensive lawsuits.
Sure, protecting your car is very important but remember, it has a finite value which means the risk is apparent if it’s damaged or stolen. However, causing an accident that results in the death of another driver or passenger will typically result in a gigantic lawsuit that can easily bankrupt you if you’re not properly insured.
Let’s talk about bodily injury liability coverage and what it will cover.
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What does Bodily Injury Liability Cover?
Simply stated, bodily injury coverage protects the insured driver if they are liable for injuries or death of a third party in an at-fault accident. The keyword being accident because somewhere in your policy you will find that intentional acts are excluded from coverage. This means if you intentionally run over your daughter’s boyfriend, you’ll likely be paying out-of-pocket.
Bodily injury liability coverage is required in almost every state and the states that require it specify minimum limits they will accept in order to register your vehicle. Your state is not concerned about damage to your car, they’re concerned about injuries you could cause to other individuals. However, if your car is financed or leased, your lender and leasing company will require you to carry it.
What will Bodily Injury Liability Pay For?
When most people think of injuries resulting from a car accident or a car-pedestrian accident, they think about injuries to the driver in the other vehicle. However, the losses that you can be responsible for after an at-fault accident can be much more than doctor and medical bills. You can also be held responsible for:
- Loss of income of the other party or parties
- Pain and suffering and emotional distress of the other party or parties
- Funeral and burial costs if the other party or parties die as a result of the accident
- Rehabilitation and medical equipment required by the injured party or parties
- Legal defense fees – in this case, the policy covers your legal fees, not the injured party’s
Who does Bodily Injury Liability Cover?
First and foremost, your bodily injury coverage does not cover your injuries. Your injuries in an at-fault accident are paid by your policy’s medical payments, your health insurance, or worker’s compensation insurance if the accident happened during work-related travel (remember, third-party, not first-party).
There are more third-parties covered under your bodily injury coverage than you might think. Your coverage is available to pay claims from injured parties in your vehicle, the driver in another vehicle and any passengers, and pedestrians or bystanders who may have been injured at the scene of the accident.
Now, are you beginning to understand why bodily injury liability coverage is so important? Well, there’s more. What if your at-fault accident was a multi-car accident? What if your at-fault accident involved you losing control of your vehicle and driving it through a Walmart? Can you imagine the number of lawsuits that would be filed against you?
What about Limits? How do they Work?
Every car insurance company will offer limits (the maximum the policy will pay) on your liability coverage. The lower the limits are that you select, the lesser the risk is to the insurance company so the lower your rate will be.
Some companies offer coverage in split limits like 25/50, some companies offer coverage in combined single limits, and some companies will offer both.
For example, if your policy has bodily injury liability limits of 25/50/25, this means your policy would pay $25,000 per person and up to $50,000 per accident for bodily injury and the third number represents what it would pay for property damage which in this case is $25,000.
If your policy has a combined single limit of $100,000 for example, then your company would pay a maximum of $100,000 for bodily injury and property damage combined.
What are the Minimum Limits in My State?
As we mentioned earlier, the state you live in will designate the minimum liability limits that you must carry in order to register your vehicle and purchase a tag. Some states take an additional step and require more coverages than just bodily injury liability and property damage liability.
You can use this graphic to determine the minimum liability limits you must carry in your state and confirm if other coverages like uninsured motorist, Medpay, or PIP are required.
Are the Minimum Liability Requirements in My State Enough?
If you are considered “judgment proof” and aren’t concerned about your liability after an at-fault accident, then the minimum requirements in your state might be sufficient.
However, if you are concerned about having enough insurance for paying your liability when you’ve caused an accident where a third-party or parties are injured, you will need more liability coverage than what’s required in your state and here’s why.
Let’s say that you live in Indiana and have a vehicle insured with that state’s minimum limits of 25/50/15. This means that your insurance company is only responsible for $25,000 per person, $50,000 per accident, and $15,000 for property damage.
On an early Wednesday morning, you are driving your daughter to her elementary school just like you do every other day. But on this particular morning, you are driving in a thunderstorm and wincing at the continual lightning strikes that are distracting you while you’re driving.
As you turn to pull into the drop-off area, your wet foot slips off the brake pedal and then accidentally hits the gas pedal causing you to crash into a car next to you. Making matters worse, your car careens off the car you just hit and your car then hits three students who were running to the building for cover from the storm.
When the police officer and multiple ambulances arrive you look to see that the car you hit (a Mercedes) is severely damaged and at the same time you recognize the driver as Adam Hall, a leading attorney at the largest personal injury law firm in the city.
Do you think your state’s minimum coverage requirements will be sufficient now?