Auto insurance liability coverage is required by law, so all policies will include this. This coverage means that if you are responsible for an accident, your insurance company will pay up to the limit you have selected. While most states have a minimum limit, you can choose a higher one to make sure you carry even more protection. In Virginia the state minimum is 25/50/25 each state can be different.
There are two types of liability limits that you can choose from: split limits or a combined single limit (CSL). These limits are per accident, meaning that if you have a bad year with a few accidents, your coverage won’t decrease based on your prior accidents.
Split limits will look something like this: $100,000/$300,000/$100,000. The first number is what your company will pay per person for an injury, while the second number is what it will pay in total for all injuries in that accident. The third number is the limit for property damage.
For example, you are driving to work and hear a loud noise. You look in your mirror to check what it was, and in that split-second the traffic in front of you has stopped, causing you to rear-end a vehicle. If there were four people in that vehicle, and all were injured, your split limits stated above would provide up to $100,000 in coverage for each person, but would cap all payments at $300,000. If each person needed $75,000, you’re completely covered. If only one person was injured and had $500,000 in bills, only the first $100,000 would be covered. The property damage limit covers any physical property, such as vehicles or buildings, that were damaged.
Combined single limits are just that: one limit that will cover everything. For the previous example, if you had a combined single limit of $500,000, there would be no cap on bills per person or just for property damage. Everything is subject to the one limit.
Have a proper amount of insurance and then having an umbrella kick in once the limits on the auto are exhausted is important.
Uninsured Motorist / Underinsured
Coverage for “uninsured motor vehicle” or an “underinsured motor vehicle” is for drivers out there that do not have coverage or are covered, but not enough. The difference between an uninsured motor vehicle (UM) and underinsured motor vehicle (UIM) is that UM protects insureds who are injured by drivers who aren’t insured (the “at-fault” driver is not insured). In comparison, UIM provides similar function if the driver’s insurance isn’t sufficient enough to pay the insured’s damages for bodily injury. If you do not have this coverage, you will pay out-of-pocket for damages and medical expenses not covered by the other driver. Especially in the case where you are covered, but the “at-fault” driver is not covered and caused the accident. There are two areas which will be covered: the “bodily damage” — medical expenses and the “property damage” — damage to vehicle.