In the United States, liability coverage insurance is required for all drivers to have on their vehicles. This type of car insurance protects a driver from the large expenses associated with being involved in a car accident. Car accidents happen every day all over the country, but only the driver that is found at fault is held responsible for the expenses. Expenses that add up after a collision can add up to quite a bit of money. This is why insurance is required by law, because most people do not have enough money to cover repair and medical bills of another driver in case of a collision. An important part of having car insurance is to know the limits of liability on the policy.
A car insurance policy cannot just pay out indefinite amounts of money in the case of an accident, and some accidents can cost a great deal of money. Every car insurance policy has a set cap on the money the company will spend in case of an accident. This is called the limits of liability and can be adjusted by the customer. There are set amounts on the policy that will go for auto repair bills and other limits are set on medical bills and property damage. All three of these parts are included in any minimum liability plan but the amounts can vary. More coverage costs more money.
Limits of liability are very important to car insurance companies. Without limits on the liability coverage for a policy, companies could go bankrupt off of an accident. Many accidents do not exceed the limits of liability placed on a policy, but the ones that do can add up very quickly. With the auto repair part of the limit, some cars cost more to replace than an auto policy will cover. If a driver were to accidentally total a sports car, they may find themselves having to pay some of the bill to replace the car if they do not first adjust the limits of liability on their policy.
Medical bills are also a danger area that can exceed the standard limits on a car insurance policy. Medical tests and treatments can cost a significant amount of money and extended hospital stays or surgeries can cause a policy to max out. Some accidents involve personal or public property like hitting a car as well as a streetlight that may need to be replaced. Property damage along with the other two has its own set limit on the policy. Limits of liability can be increased by adjusting the car insurance plan with your agent. Your insurance agent can help find the right type of coverage and liability amounts.