Every driver will be involved in a car accident at some point in their lives. According to CBS News, it is extremely likely that one fender-bender will cost an individual as much as a thousand dollars for repairs on most newer vehicles. With rising costs for vehicle repairs, premiums and deductibles are costing individuals more out of their pockets. Auto liability insurance offers the minimum protection of an individual’s finances in the event of a car accident and is required in most states in the U.S. This type of insurance is actually composed of two policies, one policy that covers bodily injuries done to others and the other policy that covers property damage if one is determined to be at fault of an automobile accident. Not having liability insurance in a state where it’s required can lead to substantial fines, license suspension or revocation, as well as prison time.
Most insurance companies highly recommend having more than a state’s minimum liability insurance coverage because of the increased opportunity to be involved in an accident involving a newer vehicle which will be more expensive to repair or replace than most minimum requirements. The often recommended insurance coverage is 100/300/50.
Pricing Premiums For Auto Liability Insurance
Statistical factors often considered when pricing premiums for auto liability insurance include age and gender of the individual, previous driving history, safety features and alarm systems that are installed on the insured vehicle, the deductible that is selected, age and model of the vehicle, how the vehicle will be used (whether for leisure or business), other residents in the home who are of legal driving age, previous behavior of the insured (like if they’ve ever been convicted of alcohol-related offenses), and average annual mileage, to name a few. These factors are believed to determine the likelihood of future claims and may increase or decrease the amount the individual is expected to pay for their coverage.
Deductibles are payments that are made directly from the insured’s pocket and are often paid directly to the garage where the repairs are made after an accident. Premiums are generally lowered when an insured agrees on a higher deductible. Single drivers tend to have higher premiums than their married counterparts. Teenagers with no driving history are usually given higher rates than more experienced drivers who are expected to be able to watch for and avoid more car accidents. Drivers of high-performance and luxury vehicles are also charged more for their premiums because of the increased likelihood of accidents and costs of repairs, respectively.
Discounts may be applied to the cost of premiums for students who get good grades or are residents of a given state but live away from home (like many college students). Discounts are also often provided to newly graduated students and premiums tend to be lowered for drivers once they hit the age of 25. Seniors are generally provided with lower premiums because they tend not to drive as many miles as the rest of the population.
Auto Liability Insurance Requirements Are Not Everywhere The Same
Each state has its own minimum requirements, and policies are often shown listing three numbers. In Illinois, the minimum automobile liability insurance required in 2009 is 20/40/15 and Is known as a split limit. This means that residents of Illinois who own vehicles must have a minimum limit of liability insurance of $20,000 for bodily injury (BI) done to each person in an accident, $40,000 for bodily injury done to all persons in an accident, and $15,000 for property damage (PD) done in an accident in order to satisfy the state law. After these insurance limits have been met, the individual will be responsible for the remaining costs out of their own pocket.
Other states, like New York, require Personal Injury Protection (PIP) coverage in addition to auto liability insurance. Personal Injury Protection is often referred to as no-fault protection because the fault of the insured isn’t a factor in determining payment and because the premium should not be increased with a PIP claim. Illinois, like many other states and jurisdictions, also requires Uninsured Motorist (UM) coverage. Umbrella liability policies offer additional protection over the initial liability insurance of homeowners and auto policies and are generally offered by companies when liability policies meet a minimum of 250/500/100.
Helping You Understand Auto Liability Insurances
Many people do not know much about auto liability insurances. Knowing more about them can lead to getting a cheap auto liability insurance in the future. In the next three videos an insurance agent explains what auto liability insurance are, what kind of car liability insurances are available and how auto insurance premiums work. I really recommend these three videos if you do not have a clue about auto liability insurances.