Automobile liability insurance is the piece of your car insurance policy that pays for damaged property, medical bills, and other damages done to a person you have been in an accident with if it has been determined that you were at fault.
The liability clause of your auto insurance policy accounts for up to half of the price of the premiums you pay, and is worth every penny.
The key thing to know about liability insurance is that you absolutely must have enough coverage to protect yourself in case you do cause an accident.
Not having enough coverage can lead directly to financial ruin.
If you do not have enough liability coverage you can, and probably will, be sued for any amount of money your car insurance company did not pay.
The second thing you need to understand about your auto liability insurance is how it is written.
In most cases you will see a number that looks like this; 25/50/25.
These are the limits on your coverage.
All three numbers stand for thousands of dollars.
The first $25,000 dollars is the maximum amount your insurance company will pay out to one person injured in an accident.
This is for medical bills, lost wages, pain and suffering, and more.
As you can imagine $25,000 dollars may not be enough liability insurance.
The second number, $50,000, is the maximum your policy will pay to all people injured in an accident.
If you hit a van that has five passengers the most your insurance company will pay is $50,000 dollars.
Again you can see why you would want to raise this coverage amount.
The last number, again $25,000 dollars, is the maximum amount your auto insurance company will pay out to repair damaged property.
This can include their car or anything else they own that you damaged.
If you are unfortunate to total someone's new car this will clearly not be enough coverage and it is likely you will be held responsible for the damages.
Each state has different laws mandating how much automobile liability insurance that you must car, but regardless of what they recommend you should seriously consider buying more than the recommended minimum.