In most states, auto liability coverage is a legal requirement for driving a car. Yet the most basic policy may not provide the coverage you need if you’re in a serious accident.

There are 2 basic components of liability auto insurance

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If you cause an accident resulting in injuries, then bodily injury liability protects you by paying for damages you may become legally liable for following an automobile accident. This includes paying for an injured party's medical bills and loss of income, up to your coverage limit.

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If you cause an accident resulting in damage to another person's vehicle or property, property damage insurance pays for those repairs, up to your coverage limit. It will also provide for your legal defense if a suit is brought against you following the accident.

Minimum and maximum limits on auto liability insurance

A limit is the maximum dollar amount your insurance may pay per event. For example, if you have a property damage limit of $10,000 and cause $15,000 in damages in a covered accident, you are responsible for the excess $5,000.

If you carry only the state-minimum required liability car insurance with the lowest limits and you’re responsible for a bad covered accident, you would have to pay the balance of the claims that exceed your policy limits. It’s smart to select the highest auto insurance liability limits you can comfortably afford so you have adequate coverage if the unthinkable happens.

How much liability auto insurance you’re required to buy depends on the state where you reside. How much you buy beyond the legal minimum depends on your finances and assets. If money is tight, you might need to settle for state minimum limits, but it can be risky. If you have sizeable assets, you may want to consider higher limits, like those found in a personal umbrella policy that offers an extra layer of protection.

Liability car insurance alone does not cover your car

If you opt for liability car insurance alone, you’re legally covered, but damage to your vehicle isn’t. That could cost you thousands to repair or replace the vehicle you depend on every day. If you’re looking to cover damage to your vehicle, you may want to also consider collision and comprehensive coverages.

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Insurance terms, definitions and explanations are intended for informational purposes only and do not in any way replace or modify the definitions and information contained in individual insurance contracts, policies or declaration pages, which control coverage determinations. Such terms may vary by state, and exclusions may apply.