What is Liability Insurance Coverage & What Does it Cover? Explained

Liability car insurance is a type of car insurance that provides coverage for damages or injuries that you may cause to others while operating your vehicle. It is mandatory in most states and is typically required as a minimum coverage to comply with state regulations.

There are two main types of liability coverage: bodily injury liability coverage and property damage liability coverage.

Bodily injury liability coverage provides protection for any physical harm that you may cause to others in a car accident. It covers medical expenses, lost wages, and other related costs incurred by the victim.

Property damage liability coverage, on the other hand, provides coverage for any damage that you may cause to someone else’s property while operating your vehicle. This can include damage to another vehicle, a fence, a building, or any other property that you may hit while driving.

It’s important to note that liability insurance does not cover your own medical expenses, car repairs, or any other costs incurred as a result of an accident. For that, you would need additional coverage such as comprehensive, collision, or personal injury protection (PIP) insurance.

Liability insurance coverage is usually expressed as two numbers, such as 50/100, meaning $50,000 per person and $100,000 per accident for bodily injury liability, and $50,000 per accident for property damage liability. It’s important to choose the right coverage limit that fits your needs and budget.

What is an example of liability coverage?

Here’s an example of how liability coverage would work in practice:

Imagine that you are driving your car and accidentally hit another vehicle, causing significant damage. The other driver sustains injuries and requires medical treatment. With liability coverage, your insurance company would pay for the other driver’s medical expenses and car repairs, up to the limits of your policy.

Let’s say you have a liability insurance policy with limits of $50,000 per person and $100,000 per accident for bodily injury liability and $25,000 per accident for property damage liability. In this case, your insurance company would pay up to $50,000 for the other driver’s medical expenses and $25,000 for the repair of the other driver’s car.

It’s important to keep in mind that liability coverage only applies to damages and injuries you cause to others. If you are found to be at fault in the accident, your own expenses, such as car repairs or medical bills, would not be covered by liability insurance. For that, you would need additional coverage, such as comprehensive or collision insurance.

Why do I need liability insurance?

In Canada, liability insurance is typically required as a minimum coverage to comply with provincial regulations. The purpose of liability insurance is to provide financial protection in the event that you are found to be at fault in a car accident and are responsible for damages or injuries to others.

Liability insurance covers the cost of repairing or replacing property that you damage, as well as covering the medical expenses, lost wages, and other related costs incurred by the victim. Without liability insurance, you could be held financially responsible for these costs and may be required to pay them out of your own pocket.

Having liability insurance not only helps protect you financially, but it also provides peace of mind. In the event of an accident, you can feel confident that your insurance company will help cover the costs, leaving you to focus on recovery and getting back on the road.

It’s important to choose a liability insurance policy that fits your needs and budget, and to make sure that you have enough coverage to protect your assets in case of an accident.

Liability insurance vs full coverage