The importance of liability insurance is extreme because it protects you from potential financial ruin. It is also an assurance for other drivers of medical and financial assistance; since in the context of liability coverage, it is assumed that you are the driver at fault. In other words, you would not need liability insurance coverage if you can guarantee that you would not cause anyone harm while driving, or never be involved in vehicle accidents. However, since this is highly impossible, and because everyone is very prone to accidents, the liability coverage simply cannot be made do without.
Generally, the liability coverage covers harm for (1) bodily injury and (2) property damages inflicted on the third party only. Say, for example, that you crash with another vehicle and in the process damage a wire fence. That is an example of you inflicting bodily injury to the third party, and damaging the other party’s property (the vehicle) and other people’s property as well (the wire fence). Liability coverage will pay for these damages. Another general of this coverage pays for these damages per person, per accident.
There are many variations of the liability coverage, varying from state to state (at least in the US) and depending on specific policies per company. Some states extend the coverage to you as the driver of a vehicle other than your own, some do not. Some policies grant protection to people who do not have their own vehicles, under the policy of the vehicle-owner.
In some areas, the Liability coverage is categorized into two policies – the (1) Combined Single Limit policy, which covers for combined expenses of bodily injury and property damage. The (2) Split Limits policy, on the other hand, pays for expenses categorized into bodily injury and property damage.
Take note that when deciding on which liability limits to pay for, choosing the minimum limits may seem great at the moment, but when the need arises, it will fire back drastically. A case in point is that companies only pay to a certain extent – to the amount that you paid. If, for instance, you inflict property damages to a third party amounting to $65,000, but your limits are only at $10,000, you would have to pay for the amount exceeding $10,000. The states’ requirements of minimum limits vary – Oklahoma, for instance, sets the limit at $25,000 while Indiana sets it at $10,000. Therefore, it is important for you to know the specific policies of your state before being able to know what policy may perfectly fit your needs.