The Good, Bad, And Ugly Of Basic Liability Auto Insurance Coverage
The requirement to maintain auto insurance in most states is a law that protects all drivers from facing an auto accident without getting paid for damages caused to their vehicle by another driver. However, having to maintain auto insurance is also an extra bill that individuals have to take on, which can be strenuous on the budget if you don't have a lot to work with already. In this situation, most drivers opt for basic liability coverage if they can. If you are carrying the basic liability coverage on your automobile, there are some good points to keep in mind, some bad pitfalls to consider, and one ugly truth you have to keep in mind.
The Good About Basic Liability Coverage
When you're on a strict budget, liability coverage gives you the minimum level of coverage while still keeping you within the limits set forth by the state where you reside. The standard allowed liability coverage minimum does depend on where you live, so this basic amount can vary from place to place. This is also a good auto insurance option if you have other factors that drive up the price of your coverage because you are a high-risk driver or have special needs, such as
- if you have prior accidents on your driving record
- if you have a teen driver on your policy
- if you have previously been charged with a DUI
- if you have multiple vehicles that you have to carry insurance on
The Bad About Liability Insurance Coverage
Because liability only provides coverage for the repair and medical costs for the other driver, you could be left paying out of pocket for the damages done to your own vehicle if you were the cause of an auto accident. This means that if you are involved in a wreck that is deemed your fault, your insurance will not help you get your wheels back on the road. For most, this is a risk most taking in order to save money on premium costs.
The Ugly Limitations of Liability Coverage
There are some situations when you will have to pay for more than just liability coverage. Specifically, if your vehicle is not fully owned by you. For example, if you have a lien on a new vehicle because you are still paying for it, the lien holder can require you to carry more than just liability. This is because the lien holder needs to be certain that in any accident, the costs of repairs of the vehicle will be covered.