The purpose of auto insurance is to protect you and your family from damages to your person or property in the event of a car accident. You also purchase auto insurance to protect your family from losses incurred by others. Liability coverage is for covering the damages sustained by other individual(s) in an accident you are deemed responsible for. Liability coverage is of two types: Bodily Injury Liability (BI) and Property Damage (PD).
Bodily Injury Liability covers for other peoples’ bodily injuries or death in an accident you are responsible for. This insurance also provides for legal counsel if any other party involved in the accident files a lawsuit against you. BI coverage only covers injury to other party and not to your vehicle or property. It also does not cover you or other people on your policy. This minimum liability policy is mandatory in most states to ensure payment of compensation to innocent victims in traffic accidents. Victim’s compensation can include medical bills, loss of wages, pain and suffering. It is advisable to not select limits that are too low as this would jeopardize your finances and property in case of a serious accident. If your policy does not provide adequate coverage, if you or a driver covered by your policy is involved in a serious accident for which damages exceed your limits you may have to liquidate property and other assets to pay for the damages. Your future earnings may also be attached to compensate any such liability.
Property Damage Liability is used to cover damages of another’s property in an accident caused by your negligent driving. Usually damage to the party’s vehicle is to be compensated, but “property” may include a house, wall, fence or other property. As with BI, PD also covers legal fees incurred to fight any lawsuit filed against you. As described before, selecting limits that are too low would also expose you to financial risk.
Comprehensive coverage provides coverage to your vehicle from damages incurred due to Acts of God, like hurricanes, tornadoes, floods etc. and from damages from fire, theft, vandalism, or impacts from animals etc. You might be required to purchase this type of auto insurance if you have a new car or a vehicle in excellent condition that would be expensive to replace or repair the vehicle in case of losses. Some finance companies will also demand you carry this coverage if your car is financed or leased.
Collision coverage is for your own car if it is involved in a collision with another car or object. Many owners of older cars opt against this type of auto insurance. Towson residents can shop for the best deals auto policies from agencies offering coverage to meet your requirements.
