Should you cause an accident that injures other people, bodily injury insurance pays for the medical bills of those injured. It also pays for your legal defense if you’re sued; however, it does not pay for your own injuries. Bodily injury insurance is combined with property damage coverage to make up the liability portion of your auto insurance policy.
Bodily Injury Basics
While liability coverage is required in 49 states and the District of Columbia, New Hampshire is the only state that has no mandatory insurance law. However, it does have a state "financial responsibility" law that requires uninsured motorists to have enough assets to pay for an accident if they choose not to carry liability insurance. Bodily injury insurance pays not only for hospital and medical bills, but also for rehabilitation, long-term nursing care, funeral expenses, lost earnings, pain and suffering and other damages. Truckers must also have liability coverage to maintain their commercial licenses.
When you purchase car insurance, you must select limits for your bodily injury protection. Limits include a maximum amount of benefits per injured person and per accident. For instance, you could select $20,000 of coverage per person and a maximum of $40,000 per accident. This means that your insurance covers the cost of each person's injuries up to $20,000 -- and up to $40,000 total for all injuries resulting from the accident. These limits are typically indicated as $20,000/$40,000 or 20/40. Often, bodily injury and property damage liabilities are indicated together, such as 20/40/10. The "10" means the liability covers $10,000 in property damages along with the injuries.
While you can elect any level of coverage, states have minimum requirements for liability limits. California has a relatively modest minimum requirement of 15/30/5. The Insurance Information Institute indicates concern that most states have minimum limits well below what it believes is acceptable and practical. It advises drivers to elect minimum liability protection of 100/300/50, which more likely would cover the possible costs associated with severe accidents involving multiple passengers.
When you don't carry enough insurance coverage, you run the risk of civil lawsuits filed by the injured party. If you are found liable, you could end up paying tens, or hundreds, of thousands of dollars out of your pocket. Another way to more adequately protect yourself from financial ruin is through a personal liability policy known as umbrella insurance. This covers costs beyond what your home or auto liability pays. For instance, if your auto liability pays $50,000 and the total costs are $150,000, your personal policy pays the additional $100,000. CarInsurance.com notes that you can find $1 million umbrella policies for as little as $200 per year.
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