When You Rent A Car
Car rental agreements vary from one car rental company to another. However, all car rental companies must provide the minimum coverages required by law. Car rental companies may sell a Collision Damage Waiver , also known as “Optional Vehicle Protection” . For rentals of 30 consecutive days or less, car rental companies in New York State can sell CDW, or, if not purchased, charge a renter for the total value of a stolen or damaged rental vehicle. The daily cost of the CDW may be as high as $12, depending on the value of the vehicle.
In addition, some car rental companies offer higher liability limits than the required 25/50/10 at an additional cost. You may want to purchase this additional coverage if you do not own a car. If you already have a policy with higher liability limits, it will provide the coverage while renting a car. Some rental car companies are also licensed to sell additional accident and health coverage and coverage for personal items stolen from the vehicle. These coverages are also regulated under the New York State Insurance Law and must be underwritten by a licensed New York State insurer.
Mandatory Automobile Insurance In Colorado
Automobile owners in Colorado are required to carry liability insurance. Liability insurance covers bodily injury to another person or property damage to another’s vehicle or property when the insured is at fault for an accident. The following minimum coverages are required by the state, although higher coverages may be purchased:
- $25,000 for bodily injury or death to any one person in an accident
- $50,000 for bodily injury or death to all persons in any one accident and
- $15,000 for property damage in any one accident.
Selfinsurance. Any individual who has over 25 vehicles registered to his or her name may qualify as a selfinsurer by applying for a certificate of selfinsurance from the state Insurance Commissioner. The Insurance Commissioner must ensure that the individual will be able to pay the minimum coverages required by the state. For more information on selfinsurance, contact the state’s Division of Insurance within the Department of Regulatory Agencies .
What States Require Additional Pip And Um Coverage
Twenty-two states and the District of Columbia have uninsured motorist and/or underinsured motorist coverage requirements. Those states are Connecticut, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Vermont, Virginia, West Virginia, Wisconsin, and D.C. Although New Hampshire does not require auto liability insurance, drivers in this state need to show financial responsibility to cover accident expenses and purchasing insurance, which may include UM coverage.
Thirteen states require personal injury protection coverage. Those states are Delaware, Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Utah and Pennsylvania.
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How To Determine How Much Coverage You Need
An auto accident can lead to more than just injuries and property losses. If youre at fault for a crash, the other driver might sue you for damages or pain and suffering. Financial and insurance experts recommend that you carry at least:
- $100,000 in bodily injury liability coverage per person
- $300,000 in bodily injury liability coverage per accident
- $100,000 in property damage liability per accident
These coverage levels should provide adequate protection for many drivers. However, you should carry enough liability insurance to protect all your assets. If you have a net worth of around $250,000, 100/300/100 in liability coverage is probably all you need. However, folks with a high net worth might need greater protection.
A single umbrella insurance policy can provide liability protection for your car, home, and recreational vehicles. Umbrella policies kick in when you exhaust the coverage of a primary policy, such as auto liability insurance.
For example, if you cause a traffic accident that causes $50,000 in property damage, and only carry $10,000 in property damage liability, your car insurance will pay the first $10,000 and your umbrella insurance would pick up the remaining $40,000.
Umbrella policies typically start at $1 million of liability coverage and some insurers offer coverage as high as $100 million.
Damages In Excess Of Policy Limits
Bodily injury liability insurance will pay damages up to the limits of the policy. Drivers are personally liable for any amounts in excess of this limit.
Example: While checking a text on her phone, Jeanette accidentally runs a red light and hits a motorcycle driven by Hal. Hal suffers a fractured arm and a head injury.
Jeanette has the minimum 15/30/5 liability insurance required by California car insurance coverage law. But Hals medical bills total $50,000. Jeanette is personally liable for the excess $35,000 in medical bills .
Limits For Bodily Injury Liability Insurance
With Bodily Injury Liability insurance, you must select limits, which determine the maximum amount your insurance company will pay if you must use this insurance coverage. Limits are described either as split limits or as a combined single limit .
Split limits are two numbers that describe the maximum payment per person and the maximum payment for all injuries in an accident.
For example, if you caused an accident and chose limits of $15,000/$30,000, your Bodily Injury Liability insurance would pay up to $15,000 per person injured, up to a maximum total of $30,000 for all injuries in the entire accident.
With a combined single limit , only one number is used to describe the limits for both your Bodily Injury Liability and your Property Damage Liability insurance. In this case, there is no specific limit per person, just a maximum total that is paid for all injuries and property damage that result from a single accident that you cause.
For example, if you selected a combined single limit of $1 million, your insurance company would pay up to $1 million for all medical and injury-related bills and all property damage expenses that you caused in an accident.
Two Types Of Liability Car Insurance
- Bodily injury liability insurance pays for the other person’s medical bills and lost wages when you cause an accident.
- Property damage liability insurance covers repair costs for the other person’s vehicle or certain stationary objects like their home or fence that you may have damaged in the accident.
Definition And Examples Of Personal Liability And Property Damage Insurance
Personal liability and property damage insurance is a type of coverage that kicks in if you are ever in a vehicle accident. For either type of coverage to kick in, you generally have to be the at-fault party in the accident.
In an at-fault accident, whether with another driver or an inanimate object like a lamp pole, the accident was caused by your own error. Being negligent or at-fault in an accident makes you liable for the damages you caused.
The personal liability portion of the insurance covers injuries that you cause to other people. The property damage portion covers damage to personal or public property caused by your vehicle.
Personal liability and property damage insurance don’t cover damage to your own vehicle. For that, you will need collision coverage.
Personal injury and property damage insurance is fundamental coverage for all vehicle insurance policies.
Alternate name: Bodily injury and property damage
How Does Auto Liability Insurance Work
Youll usually see your liability coverage broken into three separate numbers that indicate your liability limits for bodily injury and property damage . For example, the minimum limits for auto liability in Illinois are $25,000/$50,000/$20,000. Heres what those numbers mean:
- Bodily injury per person: $25,000 is the maximum amount your insurance company will pay out for injuries per person.
- Bodily injury per accident: $50,000 is the maximum amount your insurer will pay out for injuries per accident.
- Property damage per accident: $20,000 is the maximum amount your insurer will pay out for damage to someone elses vehicle or property per accident.
Consider the two scenarios below, assuming your liability limits are $25,000 per person, $50,000 per accident, and $20,000 for property damage.
You hit another driver and cause them $20,000 in injuries and $15,000 in property damage. Your insurance should pay both amounts because all injuries and damage fall below your coverage limits.
Youre at fault in a car crash, but its a bit more complicated because you injured the driver and two passengers. All three have $25,000 in injuries, totaling $75,000. You might think youre covered because you have $25,000 in bodily injury per person. However, $50,000 is the maximum your insurer will pay out per accident based on your coverage. Youre now on the hook for the remaining $25,000.
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What Is The Definition Of Tpl Third Party Insurance
Third-party liability insurance or TPL refers to coverage on the automobile policy that helps the insured to claim legal expenses for damages to others. This may include damages to someones property, causing death or bodily injuries. Liability coverage protects the insured against claims expenses due to lawsuits up to the policy limit on the coverage. This will help the policyholder to pay the high legal costs for settling claims for killing or injuring someone and causing property damage.
How Much Personal Liability Coverage Do You Need
Homeowners insurance policies usually offer liability limits between $100,000 and $500,000. In case thats not enough, companies that target wealthier consumers, like Chubb, sell amounts well into the millions.
The amount of personal liability insurance you choose depends on the value of your assets, your chance of being sued and your tolerance for risk.
Consider buying at least enough personal liability insurance to cover your net worth. You might want to choose a higher amount if any of the following lawsuit risk factors apply to you:
You have hobbies that could potentially injure others, such as skiing, hunting or surfing.
You have a swimming pool, trampoline or other attractive nuisance on your property.
You own a dog.
Youre a public figure or a wealthy member of the community.
You frequently host parties in your home.
If your insurance company doesnt offer high enough liability limits on your homeowners policy, you might want to add umbrella insurance. This type of policy gives you extra liability coverage on top of your existing homeowners and auto policies, with limits typically starting at $1 million.
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How Much Does Personal Liability And Property Damage Insurance Cover
How much your insurance company will cover if you cause an accident depends on two factors:
If multiple people are injured in an accident, claims are paid out on a first-come, first-serve basis. This means whoever files a claim first has the first opportunity at being covered up to the stated limits.
Because personal injury coverage is paid out in first-come, first-served order, you shouldn’t delay in filing a claim if youre injured in an accident caused by another person.
The maximums stated in your policy are the ceiling for what your insurance company will have to pay. If individuals suffer injuries worth more than the insurance coverage you have, they can also try to hold you accountable for more by taking you to civil court.
For example, if you hit another vehicle with four people in it, all four people could sustain injuries. If your personal liability limits are 100,000/300,000 and each person in the other vehicle files a claim with your insurance company for $20,000, the total amount is less than $100,000 per person and $300,000 per accident.
When The Costs Of An Accident Exceeds Your Liability Limits
You would be financially liable to cover the remaining expenses if accident-related costs exceed your liability limits. Let’s say you had a car accident that caused $35,000 in medical expenses and your liability limit is $30,000, your insurer would cover $30,000 and you’d be on the hook for the remaining $5,000. The injured parties may also sue you to claim the difference. This is why people often buy more coverage than legally required.
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Example Of How Property Damage Liability Insurance Works
Here’s an example of what might happen if your car insurance policy has liability limits of 25/50/20 and you cause an accident on the highway involving two other vehicles:
- Person 1’s car is totaled, costing $20,000 in property damage.
- Person 2’s car has $5,000 in property damage.
- You would be responsible for none of Person 1’s property damage.
- You would have to pay Person 2’s $5,000 in property damage .
To learn more, check out WalletHub’s guide to property damage liability insurance.
Your property damage liability insurance is only used when you are at fault. If another driver is at fault and your car or other property is damaged, their liability insurance will help pay for your expenses. However, if you are at fault, the only way to have insurance pay for your repairs is if you have collision coverage on your policy.
Property damage liability insurance is mandatory in most states, but the amount of coverage you are required to have varies from state to state. For example, California requires only $5,000 in coverage, whereas Texas requires $25,000 in coverage.
To learn more, check out WalletHub’s guide to property damage liability insurance.
You should have as much property damage coverage as you can comfortably afford, ideally enough to cover your assets in case you are sued after an accident. At the very least, you need to have your state’s minimum required amount of property damage liability insurance if you cannot afford higher limits.
When You Get Your New Policy Review It
Make sure the information is correct and the coverage is what you bought. Contact the company right away if you find an error. Send changes to your agent, broker, and/or insurance company in writing and keep a copy. Do not be afraid to contact the insurance company directly to make sure that your agent or broker has requested the coverage you wanted. Use “certified mail/return receipt requested” to make sure that your letter was received.
What Is The Difference Between Bodily Injury Liability And Medical Expense Car Insurance Coverage
Bodily injury liability and medical payment are not the same type of coverage, each is in place to cover different things. BI is to cover those that you may cause injury to when at fault in an accident while Medical Payments coverage is there to cover you and your passengers when you are injured, no matter who was at fault in the accident. There may also be coverage if as a pedestrian a vehicle injures you.
Medical payments may also cover policyholders and their family members when they are injured while riding in someone else’s car or when they are hit by a car while on foot or bicycling. Coverage of course is limited to the terms and conditions contained in your specific car insurance policy.
Bodily injury on the other hand does not cover you if you are injured in an accident. Bodily injury liability is for those that you cause injuries to when you are at fault in an accident. BI is mandatory in most states.
Bodily injury covers other people’s bodily injuries or death for which you are responsible. It also provides for a legal defense if another party in the accident files a lawsuit against you. Claims for bodily injury may be for such things as medical bills, loss of income or pain and suffering. In the event of a serious accident, you want enough insurance to cover a judgment against you in a lawsuit, without jeopardizing your personal assets.
What Is Bodily Injury Liability Insurance Coverage
Bodily injury liability insurance coverage pays for the medical costs of injured parties when you are at fault for causing a car accident. Eligible expenses may include ambulance fees, hospital bills and legal expenses if you are sued. Carrying the minimum requirements for auto liability coverage is required before you can drive legally in most states 25/50 is the most common minimum requirement.
Keep reading to learn how bodily injury liability coverage works and the coverage requirements for each state.
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How Much Personal Liability Coverage Should You Have
The more financial assets you have, the more liability coverage you should purchase. Your liability coverage limit should be as high as you can afford, to mitigate the risk of financial loss if someone were to sue you.
If you have assets of $100,000 or more, consider purchasing an umbrella policy or personal excess liability insurance. Both serve as a form of supplemental coverage with a higher limit.
In other words, an umbrella policy and personal excess liability insurance kick in after exhausting your homeowners coverage limits. An umbrella policy provides broader coverage, while personal excess liability insurance adds coverage to the underlying policy.
In the scenario above, an umbrella policy or personal excess liability insurance would kick in for the remaining $300,000, safeguarding your assets. Keep in mind that coverage limits will depend on your specific policy.
Insurance Information And Enforcement System
Be aware of the importance of maintaining required motor vehicle insurance coverage on a continuous basis as long as you own a car. The New York Department of Motor Vehicles has a system, called the Insurance Information and Enforcement System , that detects uninsured vehicles.
Insurers are required to report to the DMV information, such as cancellations, renewals, and issuance of new policies, on all persons they insure for motor vehicle insurance. This information is entered into an electronic database that will continuously track insurance coverage for each registered vehicle. Failure to maintain liability insurance coverage for your car at all times can result in the suspension of your vehicle registration and drivers license, as well as other substantial monetary penalties.
These procedures could result in you getting a letter from the DMV inquiring about your insurance status even if your vehicle is currently insured. Dont delay in handling any correspondence of this nature you receive from the DMV, even if you are confident that your insurance is in effect. Contact your insurance agent, broker or company for assistance in responding to these letters, or contact the DMV directly for information on how to handle such correspondence.
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