Considering Your Car Insurance - Liability Coverage by: Thomas Ajava

It is the rare person who considers buying car insurance to be a fun event. Most of us just shop by price and try to get the best deal that we possibly can. Is this the best way to go? In many cases, it is not. The problem has to do with the liability aspect of your coverage.

Few people realize that their car insurance is actually a collection of different types of insurance. One type will often be collision insurance, while another aspect of the policy may be medical insurance coverage, while yet another aspect may be applicable to certain replacement issues. The mass of information can be overwhelming to the point you aren't really sure what is important and what is not, so let's clear that up.

The most important part of any car insurance policy is the liability protection. What is liability protection? It is the aspect of the car insurance that covers you from any claim of damages by a third-party. Why would a third-party be claiming damages? Probably because you were in an accident with them and they believe you were the cause of the accident. This can make you liable for the repairs or replacement of their car as well that their medical damages. But wait, it gets better. If they sue you, you're also going to have to deal with paying a lawyer to defend you. Liability aspect of your insurance coverage may very well cover the cost of that lawyer.

You actually are already fairly familiar with the liability coverage in your insurance policy whether you realize it or not. It is represented by the two dollar figures that are quoted when you shop for car insurance. The first figure is often 15,000 followed by second one of 30,000. These two figures relate to the amount of insurance that you are buying. The 15,000 figure represents the amount of money the insurance company will pay on your behalf for each claim against you. The 30,000 figure represents the total amount of money the company will pay regardless of how many claims are made against you.

Let's focus on the $15,000 figure. Ask yourself a simple question. If you cause an accident and the other person is hospitalized, how far do you think the $15,000 will go towards paying their bills? How about towards replacing their car? It certainly is not going to go very far. So what happens when it runs out? Well, here's a scary thing. You're going to be personally liable for anything in addition to the $15,000. The insurance company does not have an obligation to continue to pay anything other than what is in the policy - a fact that should terrify you.

As you can see, a car insurance policy with a $15,000 per event coverage limit is not really much of an insurance policy at all. The good news is you can buy much higher insurance coverage amounts without spending a ton of money. For example, the difference between carrying $100,000 in coverage and carrying $500,000 in coverage is only about an $80 increase for your premiums. How can this be? Well, it has to do with the probability of you getting into an accident that will result is a big dollar money claim by a third party. While a good number of us will get into fender benders every so often, fortunately very few of us are going to get into crash that results in major medical damages. As a result, the insurance company can tell that the probability of there being a major claim for any particular policy is usually pretty low. With this in mind, the premiums for the additional coverage are also very low.

The last couple years have seen some seriously tough times for Americans given the Great Recession as they are calling it now. There are many areas where you can cut back on your insurance expenses. Lowering your total coverage is not one you should be touching. You can actually raise your coverage without spending a single dollar more than you are now. The key is to raise the amount of your deductible. This will lower your premium to the point that it more than compensates for the cost of the increased coverage.

Car insurance is one of those things we all hate to pay for until we really need it. Make sure you have sufficient coverage to protect yourself should you experience a really bad situation. You'll be glad you bought the extra coverage.