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What Is Liability Insurance?

If you are at fault in a car accident, liability insurance pays for the damages that you cause to someone else. It does not pay for your own damages. There are two kinds of liability insurance: bodily injury and property damage. Bodily injury expenses include medical bills, rehabilitation expenses, and lost wages. Property damage expenses include the repair or replacement of any items belonging to another person that you damage or destroy.

Every state except Mississippi, New Hampshire, Tennessee and Wisconsin requires some level of liability coverage. To find out what your state requires, you can check with your state department of insurance, or you can refer to There you can find information about minimum coverage requirements, along with links to websites maintained by each state’s department of insurance.

Who Is Usually Covered By Automobile Liability Insurance?

Liability insurance usually covers the following people:

Named Insured

This is the person or people named in the policy, no matter what car they are driving.


Even if the spouse of the named insured is not named on a policy, liability insurance almost always covers him or her, unless the couple does not live together.

Other Relative

This refers to anyone living in the household with the named insured who is related to the insured by blood, marriage or adoption, usually including a legal ward or foster child.

Anyone Driving The Insured Vehicle With Permission.

Someone who steals the car is not covered.

Which Vehicles Are Normally Covered Under An Auto Insurance Liability Policy?

Named Vehicles

An accident in a non-named vehicle is covered only if a named insured (see above) was driving.

Added Vehicles

This includes any vehicle with which the named insured replaces the original named vehicle, and any additional vehicle the named insured owns during the policy period (you may be required to notify the company of the new or different vehicle within 30 days after you acquire it).

Temporary Vehicles

A temporary vehicle is any vehicle, including a rental vehicle, that substitutes for an insured vehicle that is out of use because it needs repair or service, or has been destroyed.