What Is Liability-Only Car Insurance Coverage?

Function

The purpose of liability-only auto insurance is to cover costs up to the maximum allowance on the policy. This type of insurance will cover certain expenses for injuries or damage that happen to other drivers or property owners involved in an accident. It will also usually cover legal representation for accidents that are caused by the policy owner.

Types

There are two types of liability-only auto insurance. One type is property damage liability. Property damage liability will cover you or other drivers on your policy if someone else's property is damaged when you are at fault for an accident. Property damage can be defined as the other person's vehicle, fence, house or any property that is damaged. The other type of liability-only insurance is bodily injury liability. Bodily injury liability will cover expenses for injuries or death that occur to other people in an accident that you have caused.

Benefits

There are a few advantages to buying liability-only auto insurance. The main benefit is lower insurance costs. Because insurance is a legal requirement, this is the cheapest option for most people. Because you are agreeing to cover any expenses that will be required for your car or medical expenses as the result of an accident in which you are at fault, you will not have to pay as much for insurance.

Warning

While liability-only insurance is definitely cheaper if you are never the cause of an accident, it may not be less expensive if you are the cause of an accident. If you are found at fault for an accident and you are injured or your car is damaged, you will be required to pay for the medical costs and damages to your property out of your own pocket. Depending on the extent of damages, this can easily cost more than the insurance would have cost you. You will also be required to pay if you are sued as a result of the accident.

Considerations

If you are a safe driver and your car is an older model, liability-only may be a cheaper alternative. If, however, you have young or inexperienced drivers on your policy, it may not be a wise choice. Also, liability-only insurance is only an option if you own your car. If there is a loan on your car and you do not hold the title, you must have full coverage on your vehicle.