Auto Insurance Policies and Liability Coverage

Personal Auto Policy Overview

  • Liability Coverage:

    • Covers third-party liability (harm you cause to others).

    • Covers first-party damage (your own vehicle).

  • Financial Responsibility Requirements:

    • Minimum is typically $25,000 per person and $50,000 per accident in Georgia.

    • Varies by state (some as low as $15,000).

  • Policy Limits Explanation:

    • $25,000: Maximum payment for individual injury per person.

    • $50,000: Total for all injured persons (liability per accident).

    • Additional amount for property damage.

  • Legal Liability vs. Insurance Liability:

    • Insurance limits do not cap personal liability; they cap insurer's liability.

    • Wealthy individuals with low policies can still be liable for higher amounts.

  • Uninsured/Underinsured Motorist Coverage:

    • Protects when other party lacks insurance or has limited coverage.

    • Default limit matches liability limit unless opted out.

Coverage Types

  • Medical Payments (Med Pay):

    • Covers medical expenses for all occupants in your vehicle, regardless of fault.

  • Collision and Comprehensive Coverage:

    • Protects your own vehicle against damages.

Key Definitions in Insurance Policies

  • Named Insured: Primary individual(s) on policy.

  • Covered Auto: Vehicles listed in the policy, including rental or newly acquired vehicles.

  • Exclusions: Intentional acts, coverage of vehicles for hire, and others.

  • Insured Persons: Includes family members and those using the vehicle with permission.

Important Considerations

  • Buy higher insurance limits to match income and assets.

  • Insurance companies can use data and analytics to determine risk and fraud.

  • Know the coverage rules for driving in different states and the implications of accidents.