What is the difference between auto liability and general liability?

Like auto liability, general liability policies will differ in terms of what incidents are covered and how much will be paid toward each one . A general liability policy may include product recalls, which can help companies take on a variety of expenses associated with reclaiming a faulty product.

Does general liability cover everything?

What does general liability insurance cover? General liability insurance policies typically cover you and your company for claims involving bodily injuries and property damage resulting from your products, services or operations . It may also cover you if you are held liable for damages to your landlord's property.

Is general liability worth it?

A general liability insurance policy is essential if you open your business to the public, handle client property, or rent or own commercial property . It can protect you from expensive lawsuits for only about 42 dollars per month. Don't put your business at risk, apply for your policy today.

What does auto and general liability cover?

Liability Coverage is for accidents that are your fault . Bodily injury liability pays for bodily injury you cause someone else. Property damage liability pays for property damage you cause someone else. California law requires you to have this coverage.

Is comprehensive liability the same as general liability?

Comprehensive general liability insurance is the older term for commercial general liability insurance, or simply, general liability insurance . If you're out shopping for business insurance, you've almost certainly come across general liability insurance.

What does general liability refer to in auto insurance terms?

Liability insurance can also be purchased by business owners. This coverage is typically called "general liability insurance" and should be purchased separately from any personal vehicle or property insurance. It's designed to protect businesses from claims related to others' bodily injury, property damage, and more .

Is general liability insurance the same as limited liability insurance?

The key difference between limited liability and general liability is that limited liability insurance protects a business owner's personal assets (including their business interest), and general liability insurance protects the business .

What Does Liability Insurance Cover? (2024)

Liability coverage is one of the most common and important types of auto insurance. It can potentially help you avoid a financial disaster if you're found to be responsible for causing an accident. So, what does liability insurance cover?

What Is Auto Liability Insurance?

Liability insurance is auto insurance coverage that's mandatory in most states. If you're the at-fault party in an accident, you're liable for all the resultant damages. Liability coverage pays for the financial losses of the other parties who are involved in the accident.

What Does Liability Insurance Cover?

Liability insurance refers to coverage for injuries and vehicle damage that other people sustain in an accident that results from your negligence, according to WalletHub. This type of auto insurance comes in the two following forms:

Bodily Injury Liability Coverage

Bodily injury liability coverage doesn't provide direct protection for you or your vehicle. Instead, it covers the people who suffer injuries in a car accident you cause. It protects you from the damage claims that the injured parties file, such as medical expenses, pain and suffering, lost wages, and sometimes legal fees. The exact types of losses covered may vary from policy to policy and state to state.

As a rule of thumb, you should buy as much bodily injury liability coverage as you can afford. If your liability coverage isn't enough to cover all the injury-related costs that result from an at-fault accident, you may face lawsuits for the remaining amount, which can put your home and other assets in jeopardy, says Policygenius.

Property Damage Liability Coverage

Property damage liability insurance covers the damage you cause to other people's property in an accident. This type of insurance doesn't provide protection for your vehicle. To get coverage for your car, you have to purchase collision or comprehensive coverage.

Generally, property damage liability coverage pays for other people's repair or replacement costs after you cause damage to their vehicles, homes, buildings, mailboxes, lampposts, and other objects. The types of property covered depend on your policy and coverage limit, so make sure you read your contract carefully or consult your insurance agent.

What Is Excluded from Liability Car Insurance?

According to Allstate, auto liability insurance usually doesn't reimburse you for the cost of repairing your vehicle after an accident. Instead, you need to get collision coverage. Additionally, liability coverage doesn't cover vehicle damage that results from other events such as hail. Comprehensive coverage protects you against non-collision damage.

What Is the Coverage Limit for Auto Liability Insurance?

Auto liability insurance policies have different bodily injury and property damage coverage limits. These limits are expressed as three numbers, such as 25,000/50,000/20,000 or 25/50/20. The first two numbers are the coverage limits for bodily injury. The first number refers to the maximum amount your auto insurance provider will pay for each injured person in the accident, while the second number is the maximum coverage for the entire accident. The third number is the coverage limit for property damage.

In the above example, your insurance company will pay up to $25,000 for each person's bodily injury claim. However, if multiple people are injured in the accident, your insurer will only provide a maximum bodily injury coverage of $50,000 for the whole accident. Additionally, the company will pay up to $20,000 in property damages. If the costs incurred exceed these coverage limits, the injured parties may file a lawsuit against you to recover the rest.

If you're the at-fault party in an accident, remember that auto liability insurance doesn't pay for your medical bills or damage to your vehicle. While liability coverage is important, it isn't the only type of car insurance you should purchase. Consider getting personal injury protection and collision coverage to ensure you and your vehicle are protected in the event of an accident.

How Much Liability Insurance Do You Need?

As long as you're carrying the minimum amount of auto liability insurance required in your state, you aren't doing anything wrong. To get the best policy, you need to take a number of factors into consideration, Nonetheless, it's generally recommended that you buy as much liability insurance as you can. This way, you'll have greater peace of mind both on and off the road.

Bear in mind that opting for higher coverage levels will only slightly increase your auto insurance premiums but can potentially save you a lot of money and trouble in the event of an at-fault accident. Below is an example that shows how a significant increase in liability coverage affects a person's car insurance cost:

25,000/50,000/10,000: $56.25 per month
50,000/100,000/25,000: $60.25 per month
100,000/300,000/500,000: $64.50 per month

These are the average monthly quotes from eight major auto insurance providers for a 37-year-old single female driver who lives in ZIP code 94561. It's assumed that she has a 2008 Honda Accord LX and drives 12,000 to 15,000 miles per year.

How Liability Insurance Works in an Accident

Suppose you're responsible for an accident that caused injuries to three people in a vehicle. You have a per-person bodily injury liability coverage limit of $50,000 and a per-accident bodily injury limit of $100,000. If the first injured person has medical bills totaling $40,000, the second person needs to pay $30,000, and the third person incurs $25,000, you probably have enough coverage.