Liability Insurance

The minimum policy commonly required is liability insurance. It covers third party bodily injury or property damage claims that you cause. If you caused an accident, your liability insurance would pay the victim’s claims (up to a certain dollar amount minus your deductible). Liability insurance policies are stated in numerical terms such as 20/40/10. The first number indicates that this policy would have $20,000 bodily injury coverage per person. The second number indicates a limit of $40,000 bodily injury coverage per accident. The third number sets the property damage limit at $10,000. Minimum insurance requirements vary. A 20/40/10 policy, a minimum required by law in some areas, is usually inadequate considering the cost of medical and legal issues. For instance, if you did not have enough insurance and you caused a serious accident, a person could sue you and put a lien on your assets. Many insurance companies suggest drivers should have 100/300/50 coverage.

Liability Insurance Numbers Bodily Injury per Person Bodily Injury per Accident Property Damage Limit 
20/40/10$20,000$40,000$10,000
100/300/50$100,000$300,000$50,000