Buying Insurance

Lesson 2: Auto Insurance

Liability

The second important part of an auto insurance policy is known as Liability. This refers to your liability if you are involved in an auto accident which is adjudged to be your fault and your insurance company pays. The dollar amounts of liability insurance are frequently listed on the insurance policy as "per person" and "per accident". Thus you may find your auto insurance policy lists $100,000/$300,000 liability limits. This means that the maximum your insurance company will pay for one damaged auto and one injured person is $100,000. The maximum they will pay for any one acccident, regardless of the number of autos or persons involved, is $300,000. Auto Liability insurance covers not only the damage which you may do to another persons vehicle, but also to the injuries which the other driver and passengers may sustain. Costs for medical care, permanent disabilities, loss of limbs or eyes, and the cost of lost wages, not to mention the costs of litigation, can far exceed the costs to fix damaged autos. It is generally advisable therefore to choose the highest liability limits available to you. (Buyer beware: don't scrimp on Liability limits). On your "sueability factor" see Hungelmann, pp. 26-29.

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