Guide to General Car Insurance and Liability Coverage

Guide to General Car Insurance and Liability Coverage

If a policyholder should accidentally kill or injure someone, he or she can be held liable under the law for hospital and medical bills and many other items, such as the costs of rehabilitation and long-term nursing care, pain and suffering of the injured person, or the victim’s lost earnings or potential future earnings. If an injury is serious or fatal, these expenses can run into many thousands of dollars.

Bodily injury liability coverage is designed to pay these expenses. It also pays legal expenses involved in defending the policyholder against a lawsuit. General car insurance coverage applies when the car is driven by the policyholder, resident family member or anyone driving with the policyholder’s consent. The policyholder and resident family member are also covered while driving someone else’s car with permission.

Liability law dictates that person A is responsible for paying the cost of injuries to the person or property of person B when A caused B’s injuries through negligence. If A runs a red light and his car crashes into B’s car, most people would agree that A is clearly at fault for B’s injuries and damage to B’s car. Let us suppose, however, that there are no witnesses to the accident, and A states that he believes the light was green. Or suppose that the light was out of order, or that there was no light at the intersection, or that A ran into B because he swerved to avoid a child who ran into the street.

Suppose both A and B are injured and each says the other was at fault. Liability law and bodily injury liability insurance both require that fault be established. When neither party is willing to admit fault, which frequently happens, fault must be determined by the courts.

In many cases, the insurance companies of both A and B will hire lawyers and the case will be tried before a judge and jury who will decide who was at fault after hearing various testimony. Needless to say, this is a time-consuming and expensive process.

Because of the enormous legal expenses and delays in using the courts to establish fault in traffic accidents, a number of states have enacted some form of so-called “no-fault” law for bodily injury (but not property damage) liability. In general, these laws provide that for damages below a certain dollar amount (for example, injuries costing $1,000 or less to treat), or a certain degree of seriousness, each driver’s own general car insurance company will pay the cost regardless of who was at fault. This avoids the expense and hassle of going to court for relatively minor claims.

In every state, however, the fault system is in use for serious injuries or death, and drivers need bodily injury liability insurance to protect them from the cost of these claims and to defend them against allegations of negligence.

Property Damage Liability. Property damage liability insurance pays for legal defense and claims against the policyholder resulting when the policyowner’s car damages the property of others. Often the property is another car, but coverage includes damage to such property as personal belongings, trees, buildings, lamp posts and telephone poles as well. The policyholder and resident family members are covered while driving their own car or someone else’s car with permission.

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