Liability car insurance is absolutely essential to drivers in the USA and Canada, as well as most other places in the world. As common as it is, many people are unaware of exactly what liability insurance means, or what it entails the owner of a liability insurance policy to. Contrary to what many people think, liability car insurance does not cover any costs to the driver who is at fault including any of their medical bills and/or car repair expenses. Liability only covers damage to the person who is NOT liable, including any damages to their property and/or any medical bills, missed work etc. It is the most basic form of insurance, and it is needed to stay legal anywhere in North America.
The reason that liability coverage is so important and vital is to prevent people from taking advantage of the system. If people don’t carry any insurance and they get into an accident, they could well be found liable and have to pay for expenses, but there is no real mechanism in place to guarantee payment if an individual declares bankruptcy. It’s like they say, “You can’t get blood from a stone.” In that hypothetical situation, an individual could very easily have their car crushed, their spine broken, and their career ended, only to receive very little help and/or compensation for an event that was no fault of their own. Obviously this is a terrible scenario, and one the government has decided it will not let happen. Basically, the reason we don’t allow people to legally drive without liability car insurance is that to do so would be allowing people a free ride and put everyone at huge risks.
I would not recommend only having liability car insurance. Some insurance companies make a big marketing pitch along the lines of making sure that you are “legal” for almost no money. They aren’t telling a lie. If you have just liability insurance you will in fact be legal in most places. What they are not telling you is that by only having liability coverage you are putting yourself at a huge risk. If you get into any sort of collision, including any wildlife claims, or if your vehicle is damaged while parked in a hit and run (where there is no way to claim liability on another party), or even if your car gets stolen, you will be out the full value of the repairs. This will also include your medical costs and any missed work that you incur. It is a terrible idea to leave yourself in this predicament, so I definitely recommending checking out medical cost coverage, comprehensive coverage, and collision insurance as well. While the monthly, or quarterly premiums might sting a little bit in order to have adequate insurance, it will sting a whole lot more if your vehicle gets totalled and you end up in the hospital all on your own dime.
While some insurance brokers will tell you that you are fine with a million dollars-worth of liability coverage, I take dispute with that. I strongly urge you to look at the two million dollar option, and even the five million dollar option is not absurd in this world of rising medical costs. The factor that most people don’t consider when thinking of possible auto mishaps that could occur, is the event that the person who gets hurt and is not liable could require hundreds of thousands of dollars in medical treatment. While the car they might be driving could only be worth say $50,000 or so, it doesn’t take long to rack up major bills if the individual you collide with is required to be rushed to surgery and has ongoing medical issues that require constant attention and hospital appointments. There is also the possibility that several individuals in the other car might be hurt to varying degrees in an accident. In this case a driver might be held liable for the medical treatment and subsequent physiotherapy and/or surgeries that multiple would have to undergo as a result of an accident. This is obviously a very sad and tragic scenario to consider, but it is still a realistic possibility that you definitely wanted to protected against every time you get out on to the highway. When you are considering advanced medical procedures and sacrificed careers, judges can order huge settlements. This is why insurance plans were invented. Don’t hesitate to upgrade your liability insurance plan because of a few measly bucks in premiums every month only to be hit with a huge claim that could radically alter your financial picture and even force you into bankruptcy as a result on one innocent mistake while behind the wheel.
Make sure and read the fine print on your liability car insurance policy as you shop around. Some people make the mistake of only looking at the dollar number on the bottom line, or merely glancing at the premiums they will pay every month, or even the deductible they will owe in the case of being held liable. While these are important concerns (who doesn’t want to save money right?), they are not the most important considerations in the long run. You want to make sure that your insurer has a good reputation and that your plan is airtight in the case that you unfortunately have to call in the policy at some point. When dealing with the aftermath of a collision or accident it is never fun to try and find your liability policy, and then deal with the financial implications, but it can get a whole lot worse in a hurry if you skip on the homework done beforehand.