Personal injury liability insurance, otherwise known as bodily injury liability insurance, is required by the law of most jurisdictions to drive a motor vehicle on public roads. This type of insurance protects you from liability for injuring someone else in an accident that was at least partially your fault, by paying medical bills and other forms of damages on your behalf in response to a lawsuit or settlement demand by an injured party.
Coverage
Personal injury liability insurance covers damages to the injured party including medical bills, lost income and compensation for pain and suffering. It may be paid in response to a legal judgment or a private settlement between the injured party and your insurance carrier.
Exclusions
Personal injury liability insurance will not cover your injuries, regardless of whose fault the accident is. It will not cover damage to either your vehicle or the other party's vehicle, any other form of property damage or any damages that are the fault of another driver. Your policy may not be triggered if you are driving someone else's car at the time of the accident, unless the owner of the car has no insurance or coverage limits are exceeded by the accident liability.
Deductibles
Almost all liability insurance policies include a deductible. A deductible is the amount of liability that you must pay out of your own pocket before the insurance company will begin paying the claim. A deductible of $1,000, for example, means that your insurance company will pay nothing if your accident liability is $1,000 or less, and will pay all but $1,000 of any accident liability that exceeds $1,000.
Coverage Limits
Personal injury liability insurance policies express coverage limits in two ways--per person and per accident. For example, a policy limit of $400,000/$900,000 means that, in the event of an accident, your insurance policy will pay up to $400,000 per injured person and up to a total of $900,000 per accident. Any amounts beyond these limits will be your liability. Most jurisdictions require motorists to purchase liability insurance with certain minimum coverage limits.
Consequences of Failure to Purchase Insurance
If you fail to carry liability insurance and injure someone in an accident that is your fault, you will have to pay the injured party's liability yourself. Your liability will be unlimited--you may have to sell all your possessions to satisfy a large claim, and your wages may be garnished until the claim is fully paid. If you are injured in an accident that is the fault of an uninsured driver, you may have to pay your own bills if the uninsured driver cannot afford to pay. Some comprehensive auto insurance policies include uninsured motorist insurance, however, which will cover your bodily injury damages in the event that you are injured in an accident caused by an uninsured motorist.
