What is Liability Auto Insurance?

Liability auto insurance covers the other party’s vehicle damage, property damage, medical bills, and legal fees that were caused by an accident which you were at fault for.

This coverage is required by most states, including Michigan, to legally drive your vehicles.


What Does Liability Auto Insurance Cover?

Liability auto insurance covers the other party’s property damage and injuries caused by an accident in which you were found at fault. This includes their car, legal fees, and medical expenses.

Usually, there are three different maximum coverage limits. A bodily injury per person limit, a bodily injury per accident limit, and a property damage limit.

In high-speed accidents or incidents, it is almost certain that the costs will pile up due to the ambulances, emergency room, doctor’s bills, specialists, surgeries, follow-up visits, physical therapy, medications, x-rays, any property damage inside the vehicle, property damage outside the vehicle, broken lights and glass, airbags, child car seats, pets and people injured, lawyers, lawsuits, lost wages, and the list goes on.

If you don’t have at least liability coverage, you are on your own to pay all these costs for them and yourself.


Liability Vs Full Coverage Auto Insurance

Liability coverage is for injuries and damages to others when you’re at fault. Full coverage auto insurance includes liability and state-required coverages, plus packages of various coverages for damages to you and your own vehicle to further protect everyone involved in the accident.

It’s worth noting that full coverage isn’t an actual insurance coverage you can buy, it’s a bundle of coverage options that will fit your specific needs and budget.


Why You Need Liability Auto Insurance Coverage

Liability auto insurance coverage is a fundamental type of car insurance that protects you financially in the event you are in an accident that causes injury to other people or damage to their property.

If you own a car or drive a car without liability insurance, you are personally liable and can be sued (which means you also need to pay a lawyer and court costs) for any and all expenses incurred for any medical expenses, wage loss, loss of services, or other costs resulting in a car accident, whether you are at fault or not.

Michigan law requires every vehicle owner to purchase automobile insurance. An eligible person for liability auto insurance is a person who is an owner or registrant of a car registered or to be registered in Michigan or has a valid Michigan driver’s license.


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Basic No-Fault Liability Auto Insurance for Michigan Drivers

Michigan has a no-fault auto insurance program intended to increase benefits for injuries, ensure prompt payment, and, at the same time, reduce legal and administrative expenses. 

Under the Michigan no-fault system, you are required to buy certain basic auto liability coverage in order to register a car.

The mandatory minimum requirement has three parts:

1. Personal Injury Protection (PIP)

Pays all reasonable necessary medical expenses if you are hurt in a car accident; no maximum limit. PIP also pays a certain amount of wage losses for up to three years.

If killed in a car accident, PIP pays spouse and dependents a monthly amount equal to what you would have received from earnings and benefits for up to three years. There is also a $20 daily stipend to pay for services you are no longer able to perform due to an accident, such as housekeeping and yard maintenance.

2. Property Protection Insurance (PPI)

Pays up to $1 million for damage your car does to other people’s property. Examples include buildings and fences, as well as properly parked vehicles.

3. Residual Liability Insurance – Bodily Injury and Property Damage (BI/PD)

Provides minimum liability coverage amounts if you cause an accident in which someone else is injured or killed:

  • Up to $20,000 for a person who is hurt or killed in an accident.
  • Up to $40,000 for each accident if several people are hurt or killed.
  • Up to $10,000 for property damage in another state.

This type of liability auto insurance coverage is typically expressed as 20/40/10.


Is Minimum No-Fault Auto Coverage Enough?

No, in most cases, minimum no-fault liability auto insurance coverage is not enough to protect you financially. Generally, a recommended minimum liability coverage is 100/300/50. 

That means $100,000 coverage of bodily injury per person, $300,000 coverage of bodily injury per accident, and $50,000 liability coverage to property damage (usually the other vehicle involved in the accident) per accident. While above the minimum Michigan requirements, this helps protect you much better financially if you are ever in an accident.

You may need even more, depending on your assets. If you have a high net worth, you want to protect yourself with as much auto insurance coverage as possible.  

The exception is that if you can’t pay a claim out-of-pocket and you don’t have many assets, there isn’t much to attach to settle the claim, so there’s less incentive for someone to sue you. In this case, the minimum cheap/low-cost car insurance required by Michigan law is probably sufficient.

In making any decision about liability coverage for your auto insurance policy, it is best to consult with a knowledgeable independent insurance broker.


Get Liability Auto Insurance Advice & Quotes from a Trusted Michigan Agency

Knowing you have at least liability insurance provides peace of mind when you’re on the road. Accidents happen, and knowing you have coverage to protect you and others involved can reduce stress in a difficult situation.

You can never be too careful driving around Byron Center or Kentwood, MI. Or in choosing the right auto insurance liability coverage. And keep in mind there’s more to auto insurance than just liability. There are also collision and comprehensive, as well as other additional coverages to consider, such as towing insurance and windshield protection.

Protect yourself and your family by letting Compass Insurance Agency find you the perfect liability insurance or full coverage for your auto needs and budget. We are independent brokers who work for you, not the insurance companies.

We work with over 20 insurance providers to get you better rates, better service, and better coverage. This is why we can save you an average of $796/year on your auto insurance!

Get Properly Covered At The Lowest Cost