If you have ever owned or leased a vehicle you would have probably heard the term, liability insurance. In simple terms, the insurance covers auto protection against damage you are liable for.Liability is broken down into two parts, bodily and property. Liability covers bodily injuries and property damage (BI/PD). This covers your legal liability, up to the limits you select, for damages caused to others in the insurance covered vehicle accident. In most states today, liability insurance is obligatory.

Under, bodily injury and property damage your insurance company pays for

 damages to an injured person as well as for property damage that you are legally obligated to pay as a result of an accident. If your policy covers you in the event where you’re sued after an accident, your insurance company will pay for a lawyer to defend you.

Liability limits generally appear as three numbers, for example, 100/50/150. The first number refers to the maximum amount, in thousands, that your insurance company is compelled to pay for bodily injury per person. The second number denotes the maximum amount that would be paid for bodily injury per claim and the third number represents the maximum your insurance company is obligated to pay for property damage you may have caused.

When buying liability insurance, it is always a good idea to “ask around”. Like most things, the cost can differ from company to company. These companies generally take into account your age, location, credit and driving record.

It is mandatory for an insurance agent to ask questions regarding your financial position. This is done so that they can determine the amount you need to protect yourself. On top of that, you might discuss an umbrella policy as added protection. The cost is usually minimal, but well worth the effort if your financial position warrants it.

One question that you should always ask concerns insurance liability and car rental. You should always keep two things in mind before you rent a car. First is to check with your current insurance company to determine if your liability covers a rental and the second would be what your deductible would be.

You may choose to go without the coverage where mandated for whatever reason, but keep in mind the penalties associated with it can result in loss of anything between loosing driving privileges to hefty fines. Therefore it is advisable not to go without automobile liability coverage.

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“Vehicle insurance (also known as auto insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident.”

There are a lot of factors which decide the auto insurance rate that you will get for your car. These include the driving record of your vehicle, how you are using your vehicle (for work, pleasure or business), the number of drivers your vehicles had, the kind of coverage limits you want, the locality you live in, your payment history, the color of your car, your insurance credit score, your occupation, your claims history and the daily, weekly and annual mileage of your car.

You should know that the usage of your vehicle is a key factor in deciding the auto insurance rate. For instance, if your are driving up and down from school or work for five days a week, 10 miles one way you have a higher chance of getting in a accident than someone who only drives 1 mile 1 way 2 days a week or someone who works from home and only drives to get groceries.

If you have one car and three drivers you will have to pay more because your car will be used a lot than if you have one driver for one car.

The next thing to keep in mind is area you live in. Your locality may be prone to higher number of accidents than any other area. Your area may also be susceptible to higher rates of burglary. These can be the factors for higher insurance rates.

As far as your payment history is concerned, if you have poor payment history or your policy has been cancelled due to non-payment, you will have to reapply for auto insurance and pay higher rates.

Last but not the least, your claims history is a key factor to your insurance rate. If you have filed a claim to your insurance company, your auto insurance rate will be affected.

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