• Adequate auto liability insurance coverage can protect you from financial disaster.auto image by jasmina nemanjic from Fotolia.com
  
  Automobile insurance isn't a one-size-fits-all product, and it has several basic components: bodily injury, property damage, collision, comprehensive, personal injury protection and uninsured motorist. Questions arise as to why bodily injury and property damage liability are necessary when an individual has collision insurance. These two components deal with your legal liability when a person and his property (including his vehicle) are damaged by you. Collision deals with replacing or repairing your vehicle.
  
  

Bodily Injury Liability

• The bodily injury liability portion of your automobile insurance, therefore, has its own cost factor and liability limits, separate from what you pay for collision or other portions of your policy. And as of June 1, 2010, according to Insure.com, it became a requirement in every state in the U.S. but two (Florida and New Hampshire) to have liability coverage, including Wisconsin, which didn't have a requirement until then).
  
  Each state determines the minimum liability coverage needed to protect others and their property if you hit them. The Insurance Information Institute recommends that this amount be a minimum of $100,000 for injury to a person and $300,000 for property damage, which includes vehicles. But only three states come anywhere close to requiring that amount: Alaska, Maine (50/100/25)--and on June 1, 2010---Wisconsin (50/100/55). Florida offers the least coverage, expressed as 10/20/10: $10,000 maximum payment if a person is hit by your vehicle as a pedestrian or hurt during an accident with your vehicle; $20,000 total payout limit for all people injured by you in the accident; and the last number--$10,000--pertains to the property damage liability limit.
  
  

Property Damage Liability

• Your collision coverage only covers repairs to your vehicle. That is why you need property damage liability coverage to provide funds to repair or replace vehicles you hit in an accident. Therefore, it is in your best interest, according to the Insurance Information Institute, to exceed state-required minimums for this coverage, as they are typically too low. This is because anything your insurance company does not pay in damages may be your personal responsibility.
  
  Florida requires the least amount of protection for its insured and those who may suffer damage from them--requiring only a minimum property damage of $10,000. Many cars and trucks cost much more than that if they are new. In addition, accidents also sometimes involve more than one vehicle being hit, as well as other items--like buildings, homes and road signs.
  
  

Considerations

• A good rule of thumb is to consider the amount of insurance you are required to carry if you have a lien on your vehicle. Lenders want to make sure they recoup dollars loaned on such purchases in the event of an accident. Carrying that same amount for property damage liability, then, makes sense, too, since another person's vehicle may carry a similar cost to replace.