The liability insurance benefit under the vehicle insurance policy is broad.  This insurance type provides financial protection against lawsuits made to the policyholder in connection with accidents that involve the insured vehicle.  Specifically, the most basic liability coverage under a vehicle insurance plan covers the following:

Bodily Injury Liability

This type of liability coverage protects the policyholder only from financial obligations arising out of lawsuits and claims filed by other individuals who allege that they suffered bodily harm because of a vehicular accident that involved the insured vehicle.  Typically, this type of coverage will pay regardless of who was behind the wheel of the insured vehicle.  Of course, the driver has to be any of the following:  the policyholder, the policyholder’s kin and family members, and anybody else to which the policyholder lent his vehicle.  In this scenario, the policyholder’s car is being pinpointed as the cause of a vehicular accident.

The bodily injury liability portion of a vehicle insurance plan will pay for the injured party’s claims for medical treatment, lost income due to inability to go to work, as well as general pain and suffering caused by the accident.  However, before such a claim is paid, there is a need to prove the insurance policy holder’s culpability in the vehicular accident.  Once the insured is proven to have indeed been the erring party, the insurance company will cover the insured’s financial obligations to the injured party, but only up to the maximum benefit limit stated in the policyholder’s vehicle insurance policy.  Each

insurance policy will expressly specify the amount of bodily injury liability benefit that the insurance policy holder can expect for every person harmed.  There is also a maximum limit for multiple victims.

The insured has to shoulder the financial burden beyond the maximum benefit provided by his insurance policy.  To avoid financial problems, some consumers purchase additional and extra bodily injury liability coverage or choose high-premium policies with higher maximum benefit levels.

Property Damage Liability

Under a comprehensive vehicle insurance policy, it will usually be provided that the insured is protected against financial losses incurred by claims that the insured has caused damage to other people’s property.  Generally, property damage includes the other party’s vehicle damages such as broken fenders and shattered windshields.  This portion of the insurance policy will also pay for damage to other people’s home property such as fences and walls.

This benefit will be paid regardless of who was driving.  The driver can be the policyholder himself, an immediate member of the policyholder’s family, or someone who borrowed the car with the policyholder’s knowledge and consent.  Similar to bodily injury liability coverage, this portion of a vehicle insurance plan usually has a maximum allowable benefit.  In addition, additional coverage may also be purchased by the policyholder.

Uninsured Motorist Insurance

This time, the vehicle insurance provides protection to the policyholder himself or herself.  In this instance, the policyholder is the victim and the perpetrator has no vehicle insurance or is underage and has no license.  There are also some vehicle insurance policies that provide additional financial protection for the policyholder if the driver responsible for the accident has an inadequate insurance cover (under-insured).  The amount that the insurance company will pay for this portion usually has a maximum limit.

No-Fault Insurance Coverage

There are so-called no-fault vehicle insurance states where financial responsibility may be assigned privately between or among the parties involved in the vehicular accident.  In a no-fault system, the policyholders will file claims with their insurance company and the insurance company directly assesses the merit of claims.  If merit is proven, the insurance company will make the necessary payments.  The whole process need not involve any court of law since there is no need to prove whose party is at fault and whose party’s insurance company will have to make restitutions.

Under a no-fault system, both or all the parties involved may make their respective claims with their own insurance company.  The insurance company will only investigate the veracity of the claim but not who is at fault for the accident.  Thus, both or all parties involved may receive their policy benefits.  The benefits are usually directly paid to the policyholder and not to the other party.

However, the no-fault system makes no guarantees that the policyholder may not be subject to court action.  If the other party wishes to file a lawsuit against the policyholder, this is more than possible.  However, each state has specific conditions that have to be satisfied before a lawsuit may be filed.  It is advisable that if you were living in a no-fault state, you should check out the specific regulations that affect your vehicle insurance coverage and benefits.

The no-fault vehicle insurance coverage plan does not usually include property damage insurance for damages caused to other vehicles and other people’s fences or walls.  They also do not cover damage for personal vehicle and property damaged during the vehicular accident.