What does basic liability insurance coverage actually cover on my car and home?
UPDATED: Jan 28, 2013
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Asked January 28, 2013
Basic liability for a home or vehicle covers two specific types of claims. It does not matter whether you are purchasing liability for your car, or for a home, the definition of the coverage will be the same. In fact, liability insurance is part of a standard home insurance policy, and is a requirement for cars in most states, making it part of most standard car insurance packages.
Where insurance companies are concerned, liability is defined as injuries or damages caused to someone else by you, your property, or a member of your immediate family. For car insurance, the coverage is extended to any licensed driver who is driving the vehicle with your permission. For example, if you loaned your truck to a friend when she moved, she would be covered. The insurance company prefers you to notify them before allowing someone else to use your car, but short-term, temporary loans are almost always acceptable.
For car insurance, an example of liability damage would be if you backed into your neighbor's mailbox. In homeowners insurance, the same example might be if a tree on your property fell on that same mailbox. In both cases, you or your property has caused damage to the property of someone else, resulting in a valid insurance claim.
If you are at fault in an accident and someone other than passengers in your car got injured, it would be bodily injury liability insurance that paid for the injuries. Similarly, if your pastor came to visit and tripped over a loose paving stone, those injuries would be covered by the equivalent provisions in your homeowner's insurance coverage.
Liability insurance also fills an important need if the incident results in legal action. Basic liability insurance will protect you from the costs of legal representation and any resultant legal settlements, up to the limits set forth in your policy. Without this type of protection, someone could literally sue you for "all that you are worth," up to the limits allowed by law.
For a complete description of what liability coverage in your own respective policies, you will have to read the policies or contact your insurance company to have it explained to you. Basic liability is the same from one company or state to another, but there may be clauses that modify the policy. This could include posting limits on the coverage or even exclusions against some types of claims, such as claims against you if your dog bites a neighbor.
Answered January 28, 2013 by Anonymous