By Stacey Carroll, Write W.A.V.E. Media Contributor

Do you have or want liability car insurance? Individuals that own their cars and drive older cars often opt to reduce their monthly premiums by dropping their car insurance from full coverage to liability only, but what is liability insurance and what does it cover?

Liability Insurance Basics

A certain amount of liability car insurance is required in every state, except New Hampshire, which does not mandate a specific amount of insurance. Instead, drivers who wish to forego car insurance, must prove financial responsibility in accordance with the state’s insurance laws and regulations.

When you purchase and maintain a liability car insurance policy, it protects you against a catastrophic financial loss in the event that you are in an auto accident and are determined to be the at-fault driver. This type of insurance policy pays for the another driver’s auto accident-related injuries and for the repair or replacement of his or her vehicle.

For example, let’s say that you impact another vehicle because you were driving distracted. After an investigation into the accident, your insurance company determines that you are the at-fault driver. If you have liability insurance, your insurance carrier will pay for the other driver’s accident-related expenses and any injuries that occurred to the passengers up to your policy limits. You would be responsible for paying for your own car repairs and medical expenses.

Liability Auto Insurance Coverages

Liability auto insurance includes provisions for bodily injury, personal injury and property damage. Some states also include underinsured and uninsured motorist coverage in their liability insurance policies. When looking at your insurance policy, you will see a set of numbers separated by slashes, usually in the format of 30/50/10, that indicate your policy limits.

The first number indicates the maximum your car insurance company will pay for bodily injury for one person. The second number indicates the amount of money your car insurance company will pay for injuries to all of the occupants of the other vehicle. The last amount indicates the policy limits for property damage, which includes the repair or replacement of the other driver’s vehicle.

The Importance of Choosing the Right Policy Limits

The caveat to getting the right liability insurance policy for your vehicle involves choosing the right policy limits. You should choose policy limits that would cover most accident and injury scenarios, which means you may want to choose a policy that has higher limits than your state’s minimum insurance requirements. If you choose limits that are too low, you could still be sued by the other driver for the remaining amount of their vehicle repairs and medical bills. You car insurance agent should be able to help you choose car insurance policy the right limits for your local area and driving habits.

Determining When to Purchase a Liability Only Auto Insurance Policy

Drivers who drive older vehicles that aren’t worth much or who have recently paid off their car loans are free to purchase a liability only policy. If you are still paying money to a financial institution, your lender may not allow you to purchase an auto insurance policy that only includes liability. This is because the financial institution wants to protect their investment in the event that you default on your car loan. In order to determine if a liability auto insurance policy would be good for you, you can ask yourself a few simple questions.

• Do I own my car? - If your car is paid off, you are free to choose any type of car insurance policy as long as it meets your state’s minimum requirements because you are no longer beholden to the loan requirements of your lending institution.
• Can I afford to fix or replace my car in the event of an accident? - If you can afford to fix or replace your car if you get into a car accident, you may want to consider dropping your full coverage policy for a less costly liability policy.
• How much is my car worth? - If your car is only worth a few hundred dollars, and it’s paid off, it may not make sense to carry full coverage car insurance on your vehicle. This is because car insurance companies only pay for the repairs or replacement of your vehicle up to its per-accident value minus any applicable deductibles. If your are is worth $800 and your deductible is $500, you’d only receive a maximum of $300 for the repair or replacement of your vehicle.

Getting An Affordable Liability Auto Insurance Policy

In order to get a liability policy that meets your needs and your budget, you need to shop around. This means filling out quote forms and getting estimates from several different insurance companies. Once you have all your quotes, you can quickly compare them against each other. Just make sure to pay attention to more than the monthly premium amounts. Car insurance policies that are well below the market may have numerous detailed exclusions, or they may not meet your state’s minimum insurance requirements.

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By Stacey Carroll, Write W.A.V.E. Media Contributor

When switching from renters to homeowners insurance or choosing a new homeowners policy, it’s important to understand the details of the policy as well as the cost. In general, homeowners insurance protects you against financial loss in the event of fire, theft, vandalism and covered natural disasters (rain, hail, lightening and wind). It doesn’t normally protect against floods. To be fully protected in the event of a flood, a separate flood insurance policy is generally required.

Homeowners Insurance Pitfalls and Mistakes

While homeowners insurance is designed to protect you against financial loss in the event that your home is damages by a covered event, it is important to read the details of the policy, including any specific exclusions, coverage amounts and the deductibles.

Exclusions

Along with floods, there are specific things that most home insurance policies do not cover, including mold and mildew damage, roofing replacements caused by the roof being past its useful life, sewerline backups, sinkholes on your property or under your home that damage its structure, insect damage, especially termites and carpenter ants and acts of war, including bombings, explosions and fire. If you expect to incur any of these damages, it may be best to purchase a home warranty along with your homeowners policy or explore other financial options that would provide you with extended coverage for the repair or replacement of your home in the event that your homeowners policy specifically excludes the cause of damage.

Coverage Amounts

The amount of coverage you choose for your homeowners policy should be an amount that would cover rebuilding your home or purchasing a similar home. Choosing lesser coverage amounts can save you money on your monthly home insurance premiums, but if your home were destroyed, you may not be able to afford the repairs or the purchase of a new home. If you purchase an amount that is higher than your home’s value, you may not see that entire amount. This is because insurance companies typically only replace the current value of your home just prior to the unforeseen disaster that damaged your home.

Deductibles

Homeowners insurance policies come with deductibles, and it is extremely important that you choose a deductible that you can always afford. This is because insurance companies will pay you for the repairs or the replacement of your home minus your deductible.

For example, your home was burglarized and the criminals took $5,000 worth of valuables. If your deductible is $10,000, you would be responsible for replacing those items with your own financial resources. If your deductible were $1,000, your insurance company would pay you $4,000 for your loss, and you would pay $1,000 towards the replacement of your items.

When you choose a homeowners insurance policy, make sure you do more than scan the monthly premium amount. Before you make a purchase, you should ensure that the items you want covered are covered under the policy and that the policy covers the types of damage you may incur during the time you live in the home. If you can’t find an insurance policy to cover certain causes of damage or critical system failures, you will want to purchase additional insurance coverage, like flood and earthquake damage and consider purchasing a home warranty if you are buying a new home.