The Purpose Of Liability Insurance
One of the things you are likely to have purchased when you purchased your auto insurance policy is liability insurance. Most of the time, liability insurance is pretty standard in car insurance policies. This is because in many states it is required. Most states feel that it is unfair for someone who is not at fault in an accident to pay for damages resulting from somebody else's disregard for the traffic laws. So, some states require proof of insurance, including liability insurance, before they will allow you to register your car. It cuts down a bit on litigation as well, as the person not at fault knows that he or she will be compensated without having to sue. Additionally, liability insurance adds greater protection to you, the driver. If you make a mistake, you do not have to pay the entire amount directly out of your pocket immediately. It can help you keep your finances from being totally devastated due to a moment of error. Liability insurance is insurance that covers you if you are found liable for something. It does not just have to be in a car, but that is the most common use for liability insurance. You pay a premium each month so that if someone's property is damaged as a result of something you do, the insurance company makes the compensatory payments. This can be very helpful, as most people cannot afford to pay the large of amount of money that comes with property damage, especially if the damaged property is a car that you hit. The point of liability insurance, of course, is that you have to be found liable, or responsible, for the damage. The insurance company will only compensate if the holder of the policy is, in fact found liable. It does no good to file a claim if you are just trying to placate someone else. Some insurance companies will pay, and then increase your premium, but many will not pay until you are deemed officially responsible, usually by a court of some sort. Some people carry liability coverage for things separate than cars. Some people like to have it in case they accidentally do something to someone's property. It is possible to carry liability insurance to cover damage done by you if you are intoxicated and vandalize a property. It is also possible to use it to protect yourself against those who do things to your property, but are somehow unable to compensate you. This is not a particularly fun claim to make, but it does provide you a measure of protection. You just need to make sure your policy specifies that it covers damages to your property, for which someone else is responsible. No matter why you have liability insurance, the bottom line is that it is an added protection. It can prevent you from being sued over a mistake. If you are sued, most insurance companies, whose jobs it is to handle such things, provide the lawyers and the legal know how to wrap everything up, all of it covered by the liability insurance. Even if you can't afford it for other things, liability insurance for your car can literally be a financial savior.
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