What bodily injury liability insurance covers
Bodily injury liability insurance helps if you or another driver covered under your car insurance policy cause a car crash that results in injury or death. While policy terms and limits vary between insurance companies, bodily injury liability insurance usually pays for:
- Medical expenses
- Funeral expenses
- Loss of income
- Pain and suffering
- Legal defense if a lawsuit results from the car crash
The coverage and policy limits for bodily injury liability insurance are written per person and per crash. If you see $25,000/$50,000 (also written as 25/50), it means that the maximum payout is $25,000 per person, and $50,000 is the maximum payout for all people injured in a single crash.
Only the injuries to other people in a crash you cause are covered by bodily injury liability insurance – not any injuries you might sustain in that crash. You would need to buy other coverages, like medical payments (MedPay) or personal injury protection (PIP) to cover your own injuries.
Most states require bodily injury liability insurance
Almost every state requires drivers to buy bodily injury liability insurance as part of their minimum car insurance coverages. In certain states, drivers are required to carry the same liability limits on every car they own, and most car insurance companies require policyholders to carry those same limits for every vehicle listed on their policy.
Suggested limits for bodily injury liability insurance
The higher the limits you can afford, the better your assets will be protected if you cause a car crash that results in injury or death. However, insurance experts like the Insurance Information Institute (III) suggest carrying a minimum of $100,000 per person and $300,000 per accident (also written as 100/300 coverage) in bodily injury liability insurance.
Consequences of not carrying bodily injury liability insurance
If your state requires bodily injury liability insurance but you don't carry any, you may face fines or penalties like suspension of your driver's license and/or vehicle registration. The greater risk, however, is being left personally responsible for the injuries or deaths resulting from a car crash you cause. You could be forced to surrender your savings, property, or other assets to pay the victims if the judgment goes against you. Regardless of whether your state requires you to carry bodily injury liability insurance, it could be a worthwhile investment against losing valuable assets you've worked hard to obtain.
Low-limit bodily injury liability insurance can be risky, too. If you cause a major crash that results in injury, funeral, or legal expenses exceeding your limits, you will most likely be responsible for paying those expenses. Buying the highest limits you can afford is a good idea.
Differences between bodily injury liability insurance and medical expense insurance
Bodily injury liability insurance and medical expense insurance serve different purposes and provide different coverages. While bodily injury insurance covers others that are injured as a result of a car crash you cause, medical expense insurance covers you and any passengers in your vehicle who are injured in a car crash, regardless of who is at fault. Depending on the specifics of the plan, medical expense insurance could also cover policyholders (and other people on that policy) who are injured if they're a passenger in another person's car. It could also cover them if they're hit by a car while walking, bicycling, or using another form of non-motorized transport.
Keep in mind that bodily injury insurance doesn't cover you if you're injured as a result of an crash caused by another person – it's only for the other people who might be injured or killed by a crash you cause. Their claims could include medical expenses, pain and suffering, or loss of income. It also covers lawyer expenses if a person injured by a crash you caused takes legal action against you. Ultimately, you want your bodily injury insurance plan to be sufficient to cover your assets if you cause a serious crash which leads to a legal judgement against you – depending on the particulars, that could be hundreds of thousands of dollars.
Take a look at your existing health insurance policy to decide if additional medical expense insurance is necessary. Your medical expenses may already be covered in part or whole by that policy.
This article is adapted with approval from carinsurance.com: http://www.carinsurance.com/how-do-points-affect-insurance-rates.aspx