Car Insurance & Liability Laws
- Driving is a privilege.Close up detail of a classic car at a car show image by Rob Hill from Fotolia.com
Owning a motor vehicle is a luxury stemming from the privilege of being able to drive. Liability insurance is a requirement of owning a vehicle. Liability insurance protects you in the event of an accident causing financial damage to property as well as injury to individuals. For example, destroying a homeowner's fence after skidding off a patch of ice makes you financially responsible for the damage. Liability insurance passes the cost onto your insurance company. - Minimum requirements for liability insurance differ by state. The Department of Motor Vehicles is a good place to start when searching for the minimum insurance requirements. Once you're armed with the knowledge of what the minimum requirements are for the state in which you live, you can shop around for an automobile insurance policy, confident you are not overpaying for insurance.
- New Hampshire and Wisconsin are the only two states not requiring liability insurance. If you live in Wisconsin, this is about to change. Starting in June of 2010, all Wisconsin automobile owners will be required to carry liability insurance. Until then, like the State of New Hampshire, drivers are required to show proof of assets to cover the cost of damage in the event of an accident.
- Injury and death are covered by insurance.Halloween Skeleton In Wheelchair image by Chuck Alexander from Fotolia.com
Your liability insurance is written in a trio of numbers and will appear on your policy looking something like 20/40/10. The numbers will differ according to the amount of liability insurance required in your state. In this case, the 20 represents (in thousands) the maximum amount of money paid out to each injured person in the event of an accident. The 40 represents the amount paid out per accident to you in bodily injury. Insurance agents will constantly mention the term PIP when offering you different rates for different types of liability insurance. They are referencing the first two numbers in our trio of numbers. PIP stands for Personal Injury Protection. The third number represents the amount your insurance company will pay out in property damage. - When purchasing liability insurance, you should take two things into consideration. First and foremost, the term "Deductible." This is the amount of money you are responsible for. If you take a policy with a $500 deductible, you have to pay the first $500 before insurance coverage kicks in. You should also be aware minimum liability does not often cover the true cost of damage. Automobile accidents are horrible experiences and can cause permanent physical damage to you or a passenger. A policy extending $40,000-$50,000 does not cover the cost of life-altering injuries. Savings a few bucks over the course of a year could cost you you're financial future. Drive safely and with a liability policy that is right for you and your loved ones.
