Auto liability insurance coverage is mandatory in most states. But, what does it mean, and what does it cover? I will explain what auto insurance liability coverage means and guide you through the minimum requirements by state.

Liability insurance is the most basic type of car insurance coverage. In 49 states and the District of Columbia it is mandatory for all drivers to have auto liability insurance. New Hampshire is the only state that does not require it. However, you must prove that you are financially capable to cover all costs in case of an at-fault accident (which can cost hundreds of thousands of dollars in case of injuries). It is mandatory to have motorcycle insurance in all but four states: New Hampshire, Hawaii, Montana, and Washington.

According to the Insurance Research Council (IRC) an estimated 12.6% of uninsured drivers haunt U.S. roads. Oklahoma is the state with the highest percentage of uninsured motorists (26%), whereas Massachusetts ranked the lowest with only 4% of drivers not having insurance coverage. Fines for driving without mandatory insurance can be as high as $5,000 and some states can even impose jail time.

What is auto liability insurance, and what does it cover?

Auto liability insurance is divided into two types: bodily injury liability (BI), and property damage liability (PD). If you are responsible for an accident, your property damage liability coverage will pay (up to a certain amount) for property damage to the property of others, this applies to vehicles as well as fences, walls, etc. And, your bodily injury liability insurance will pay (up to the amount for which you are covered) for bodily injuries sustained by third parties. Apart from medical expenses, in some states this can include pain and suffering and lost wages.

Auto liability coverage limits

The minimum liability limits is generally represented by 3 numbers that stand for dollar amounts in thousands. For example, if you live in California it would look like this: 15/30/5. The first number refers to the bodily injury liability limit for one person injured in an accident ($15,000). The second number is the bodily injury liability limit for all persons injured in one accident ($30,000). The third number is the property damage liability limit for one accident ($5,000). This means that if you were responsible for an accident, your insurance would cover a maximum of $15,000 in medical care of an injured person with a cap of $30,000 per accident. It's easy to see that although this is the minimum required, it may not be enough. If your insurance doesn't provide sufficient coverage for people's injuries, you may be sued and required to pay from your pocket.

What your auto liability insurance typically won't cover

Damage to your vehicle will not be covered by your liability policy. Although it is not mandatory, you should consider collision coverage if your vehicle is worth more than $5,000. If you have an old vehicle that is not worth much, you might prefer to skip collision coverage altogether. However, if you bought your new car with a loan, you will be required to buy collision coverage. Personal injuries that you sustain will not be covered by your liability insurance. You would need a Personal-injury protect (PIP), commonly called "no-fault" insurance. This would cover your medical expenses, in-home care and some lost wages.

Most of the time, the state's minimum auto liability insurance limits are not sufficient. Keep in mind that if the damage or injuries you cause happen to exceed your coverage limits, you will be held responsible. Below is a list of the minimum compulsory auto liability insurance by state. Make sure to check the minimum limit of liability coverage for your state to see if it offers adequate protection.

Compulsory minimum auto liability insurance state-by-state:

Alabama 25/50/25
Alaska 50/100/25
Arizona 15/30/10
Arkansas 25/50/25
California 15/30/5 (Low-cost policy limits are 10/20/3)
Colorado 25/50/15
Connecticut 20/40/10
Delaware 15/30/10
District of Columbia 25/50/10
Florida 10/20/10
Georgia 25/50/25
Hawaii 20/40/10
Idaho 20/50/15
Illinois 20/40/15
Indiana 25/50/10
Iowa 20/40/15
Kansas 25/50/10
Kentucky 25/50/10
Louisiana 15/30/25
Maine 50/100/25
Maryland 30/60/15
Massachusetts 20/40/5
Michigan 20/40/10
Minnesota 30/60/10
Mississippi 25/50/25
Missouri 25/50/10
Montana 25/50/10
Nebraska 25/50/25
Nevada 15/30/10
New Hampshire 25/50/25 (Financial responsibility only - liability insurance is not mandatory)
New Jersey 15/30/5
New Mexico 25/50/10
New York 25/50/10 (Policy holders must also have 50/100 for wrongful death coverage)
North Carolina 30/60/25
North Dakota 25/50/25
Ohio 25/50/25
Oklahoma 25/50/25
Oregon 25/50/20
Pennsylvania 15/30/5
Rhode Island 25/50/25
South Carolina 25/50/25
South Dakota 25/50/25
Tennessee 25/50/15
Texas 30/60/25
Utah 25/65/15
Vermont 25/50/10
Virginia 25/50/20 (Property damage liability insurance is mandatory unless you pay an Uninsured Motorists Vehicle fee to the Department of Motor Vehicles)
Washington 25/50/10
West Virginia 20/40/10
Wisconsin 25/50/10
Wyoming 25/50/20

You are also protected when traveling to other states, even if your minimum coverage is lower than that state's minimum requirement. For example, if you have purchased the minimum coverage required by your state and you have an accident in another state, your policy will automatically rise to match that state's minimum required coverage.

Now that you know what auto insurance liability means and you understand what the three numbers represent, you will be able to compare policies in a smarter way.

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