Liability insurance, which covers only the other driver when you are at fault in an accident, comes in two forms. Property damage liability covers any damage to the other driver’s vehicle, while bodily injury liability covers the other driver’s medical bills, not yours. Both types of coverage have limits, or maximum payouts from your provider, after which you would be financially responsible.
Within bodily liability injury are two limits: limit per person injured and limit per accident, and these limits dictate how much the insurance company covers for medical bills after an accident.
For example, say your bodily injury liability limit per person is $50,000 and your bodily injury liability limit per accident is $100,000. You are at fault for a crash with three injured people, and each has medical bills that cost about $40,000 each for a total of $120,000. You would technically be covered for those people individually, as they are each under the $50,000 limit per person. But altogether, your insurance would only cover $100,000 of the $120,000 worth of medical bills, as that is your limit per accident. You would be responsible for the other $20,000.
…injuries do happen, and car insurance may step in to pay any related hospital bills.
No-fault Coverage Options
Does car insurance cover hospital bills for both parties if neither is at fault? Yes, and you have two options: personal injury protection and medical payments coverage. Regardless of fault, personal injury protection will cover both your and the other driver’s medical bills. This type of coverage also takes care of lost wages, funeral expenses, childcare, and household maintenance.
Medical payments coverage also covers you and the other driver regardless of who is at fault for the accident. However, this type of coverage is more limited and only covers medical costs and funeral expenses. Living in a no-fault state means that you can purchase medical payments coverage to supplement your standard coverage in case your personal injury protection can?t cover all injury-related costs.
If you purchase only liability coverage, be prepared to assume the risk of covering your own injuries if you are at fault in an accident. Also, look into the minimum required limits of your state and the higher liability limits available. Though the higher limits may cost more per month, if you exceed any limits, you have to pay for the rest of the other driver?s and passengers’ injuries as well as your own. In these cases, it may benefit you to choose a liability policy with a higher limit or one of the no-fault coverage options.
Choosing between liability coverage and the no-fault coverage options is a big decision in terms of extra monthly costs and additional financial protection for you when you’re involved in an accident. If you need help making the decision, call us to answer your questions and help you pick the best coverage.