What Is Bodily Injury Liability Car Insurance?

Features

• Drivers obtain this type of insurance policy from an insurance agency. They make monthly, biannual or annual payments called premiums in order to receive coverage. Insurance companies put together these premiums and form one lump sum of money. When an individual gets into an accident, they file a claim with the insurance company. The insurance policy then pays out damages on behalf of the policy holder.
  
  

Benefits

• The medical damages from an accident can be expensive. Since bodily injury policy holders share the risk of a rare event in a process known as risk sharing, they do not have to face becoming financially devastated as a result of injuring another party in the event of an auto accident. Causing a death or severe injury in an auto accident can lead to bankruptcy. The insurance company will handle the paperwork, legal costs and the eventual payout.
  
  

Size

• Bodily injury liability policy sizes vary depending on the finances of an individual. Someone making $25,000 a year may only want a $100,000 bodily injury policy. People who own a $200,000 home may want to take out a $300,000 policy. Insurance agencies are willing to write high-dollar policies for wealthy individuals totaling in the millions of dollars of coverage. Almost all states in the United States require vehicle owners to maintain bodily injury insurance on their vehicles. Minimum coverage amounts are set by each state. New Hampshire and Wisconsin do not require bodily injury insurance, but residents who operate a motor vehicle in these states must provide proof that they have the funds to pay for an at-fault collision.
  
  

Cost

• Bodily injury insurance costs consist of premiums and deductibles. More expensive policies have higher premiums, but the percent by which the premium increases goes down as the policy value goes up. Deductibles are out of pocket money that must be paid when a claim is filed. For example, a bodily injury policy holder with a $2,000 deductible must pay $2,000 out of pocket in the event of causing injury before insurance coverage starts. Higher deductible policies have lower premiums.
  
  

Warning

• Bodily injury liability insurance only covers injuries to another party during an accident. Personal injury protection is required if you are concerned with insuring your own health while driving. It is always better to pay extra in premiums for additional coverage. An injured party may go after your personal assets if your insurance policy does not cover all of their injuries.