What is Automobile Liability Insurance?

Felicia Dye
Felicia Dye
The party at fault in an accident is liable for all damages.
The party at fault in an accident is liable for all damages.

There are a number of insurance options available for motorists. One of those options is commonly referred to as automobile liability insurance. This type of coverage refers to a basic policy that can help protect the policy holder financially. It will not, however, compensate him for his losses.

When automobile accidents occur, the party that was at fault is generally required to compensate the injured parties for losses and damages. If the party who was at fault has an automobile liability insurance policy, he may not have to use his personal assets to pay these costs. Instead, the insurance company that issued the policy may be held responsible on his behalf.

Automobile liability insurance may cover two types of costs on behalf of a policy holder. First, there are personal injury costs. This refers to monies that need to be paid to compensate a person for physical harm. Such a policy may be used to cover medical expenses, pain and suffering, or legal fees.

The second category of costs that automobile liability insurance may cover is property damage. This type of liability coverage can be used to compensate the innocent party for damage done to her vehicle. It can also be used to cover damages done to other personal or government property. This could include damages to buildings, landscaping, or highway signs.

An automobile liability insurance policy may or may not include both types of coverage. People who purchase such policies should pay close attention to the types of benefits that they are paying for. In the United States, however, it is generally required that a person have at least some form of liability insurance. The exact requirements can vary from state to state.

Another thing that automobile liability insurance policy holders should pay attention to is their coverage limits. Most policies have a specified amount of damages that the issuing insurance companies will be held responsible for. A policy holder may be sued for balances that exceed this amount.

The holder of an automobile liability insurance policy should not expect to be compensated for his personal damages when he causes an accident. This means that if he has medical bills or repair costs for his vehicle, he will be need to cover those with his personal assets. As a result, in some states, this type of insurance coverage is only available to those who do not have any outstanding balances on their vehicles.

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Discussion Comments


@Terrificli -- That may be the law, but one very annoying thing is that there are more than a few people who renew their liability coverage just long enough to get their car registered every year and then drop it.

It may be against the law to drive without that insurance, but a lot of people do it anyway. If you get in a car crash with one of those people who has no insurance, good luck getting them to pay for the damage to your car. If they don't have insurance, the chances are good they won't have the bucks to cover your damages.

Some states enforce that law requiring people to have liability insurance, but some are kind of lax about it. I wish every state that has that law would enforce the heck out of it.


In most states, liability insurance is mandatory. You can't register your car without it and it is often a crime to drive around without liability insurance.

When it comes to cars that are financed, however, lenders usually require full coverage insurance so the vehicle will be fixed even if a wreck is your fault.

Frankly, I like the idea of full coverage better because it guarantees your car will be fixed if you are in an accident. That's called peace of mind.

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    • The party at fault in an accident is liable for all damages.
      The party at fault in an accident is liable for all damages.