Understanding What A Liability-Only Auto Insurance Policy Is

If you need auto insurance for a car you are currently buying, you might be interested in finding a low-cost policy, and to do this, you might choose a liability-only policy. Before choosing a liability-only policy, you should fully understand what this type of policy is and how it works, simply so you do not misunderstand the type of coverage you have. Here are a few things to understand about liability coverage with auto insurance.

It covers damages to other drivers

The first thing to know is that the purpose of liability coverage is to protect other drivers you might cause collisions with. If you are driving and hit another car, due to your own fault, it is your liability coverage insurance that will pay the claim the other driver files. Your liability coverage will not only cover damages to that person's car, but it may also provide compensation for medical bills and other types of damages. The amount of coverage it offers to other drivers will depend on the amount of your coverage limits with the policy you have.

It does not cover your damages

Secondly, you should fully understand that when you purchase a policy that only offers liability coverage, you really have no coverage for your own vehicle and damages. In other words, if you cause a wreck with another driver, your policy will pay that person's damages; however, your policy will not pay for yours. Liability coverage does not cover your car, your losses, or your medical injuries.

If another driver caused the accident, this would not be a problem, as that person's insurance would pay for your damages, but if you caused the accident, it could leave you with major issues. For example, you would have to pay your own repair bills, medical bills, and any other bills you encounter.

When liability-only is a good idea

Before you choose a liability-only policy, you should make sure this is the best choice for you, and there are certain times it might be. For example, if this is the only type of coverage you can afford, it is better to have liability coverage only rather than to go without any insurance. Secondly, if your car is really old and worth very little, this type of coverage might be sufficient. You can always talk to an insurance agent about your needs, budget, and situation to determine what types of coverage you should choose.

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