Property Damage Liability Insurance Definition and Information
Auto insurance provides us with the needed financial protection if we are involved in a vehicle crash. Most states in the U.S. require that drivers purchase the minimum in liability protection to meet their financial responsibilities to other people or their property. So what is the liability insurance definition? And when should we use it?
Therefore, liability insurance is offered in the form of bodily injury and property damage protection. As the names suggest, bodily insurance covers injuries sustained to other drivers, passengers, or pedestrians while property damage insurance covers the damage done to a structure or property, such as a building or vehicle.
What Does this Policy Cover?
Property damage liability insurance covers the expenses entailed when you cause an accident and damage another’s vehicle, building, or a structure such as a fence. What your property damage liability plan will cover depends on the policy and the amount. That is why you need to carefully peruse the policies for this coverage and compare them.
What a Policy Will Not Cover
Most property damage insurance policies will cover the repair or replacement of damaged autos or personal property that has been damaged, such as a lamppost, fence, or house. Policies do not cover the cost of paying for your own vehicles’ damages or replacement. For this type of protection, you need to purchase collision and/or comprehensive insurance.
Tort-backed Insurance
The idea behind liability insurance supports a state’s tort legislation. To ensure the protection of the public, tort laws have been established. That is why liability insurance has been set up. It covers you financially and compensates the people you may injure and their property.
Buying the Coverage and Making Comparisons
As a result, the importance of obtaining property damage insurance simply cannot be overstated. It is fair to assume that you will cause some sort of damage or injury if you are involved in an accident, especially if you are partially or fully at-fault. If you do not take out property damage liability coverage, you can place your assets and home at risk.
What the Numbers Represent
When you review property damage insurance or liability policies, you will see a policy written in certain amounts and designated as follows:
$15,000/$30,000/$20,000
You may wonder what the above figures mean or represent if you have not previously purchased liability insurance. The first two numbers represent the amounts for bodily injury liability coverage. The third number represents the amount for property damage liability protection. Bodily injury is divided into amounts per individual and per accident. The first two numbers represent this coverage, respectively. Therefore, a basic liability insurance plan will include property damage liability protection.
All the represented amounts are based on a state’s minimum requirements. Therefore, you can purchase more insurance if you think the minimum requirements will not meet your needs. Professionals in the insurance and finance industries highly recommend that you take out more coverage if you can afford to do so.
The amount of property damage liability insurance you buy depends on your state’s limitations. For instance, if you live in California, you need to buy at least $5,000 in property damage insurance. On the other hand, if you live in Nevada, you need to purchase twice that amount, or $10,000.
Defining a Limit
A limit is defined as the maximum amount your insurance policy will pay for a claim coverage. You can select your liability coverage limits when you purchase the insurance or adjust them at a later date with assistance from your insurance carrier.
Higher Limits Will Raise Your Premium
While it is safer to opt for higher limits, doing so will also raise the amount of your premium, or monthly payment. Therefore, you need to carefully consider how much you believe you can afford so you can avoid paying too much in out-of-pocket costs should an accident happen.
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