Understanding Liability Insurance and How it Protects You

Accidents happen whether you’re in your car or in your home.  If you are found to be at fault for any of these accidents, the financial burden can be extensive. Your family’s financial security can be at risk.  These are good reasons why you need liability insurance.  

What is Liability Insurance?

If you are found legally liable for an accident, you may be held responsible for damages to another parties’ property or for personal injuries they sustained.  The resulting legal costs and medical payouts are covered by the insurance provider. 

Liability insurance differs from other types of insurance because it pays third parties, not policyholders.

Types of Liability Insurance

Liability coverage for automobiles is the most common type of liability coverage.  However, other types of liability insurance include:

  • Property damage liability for homeowners
  • Employer’s liability (worker’s compensation)
  • Indemnity insurance for businesses
  • Umbrella liability to protect against catastrophic losses
  • Comprehensive general liability for businesses

In most states vehicle owners are required to obtain liability insurance.  Also, most financial institutions require homeowners to have property damage liability insurance for as long as the home is financed.

How Does Auto Liability Insurance Work?

When an automobile accident is your fault, you must pay for the injuries or property damage.  These costs, plus any legal fees, can be extremely high.

Most people don’t have funds available to cover those extensive costs. But, if they have adequate liability insurance, the expenses are paid by the insurance company.

These are some examples of how auto insurance works:

Example 1:

Consider that your liability limits are $25,000 per person, $50,000 per accident, and $20,000 for property damage.  If you cause an accident that results in ,000 in medical expenses and ,000 in property damage, your insurance will cover both because the costs don’t exceed the policy’s limits of liability.  

Example 2:

Consider that the accident injured the driver of the car and two passengers.  With $25,000 in injuries per person, the total would exceed your $50,000 per accident limit.  This leaves you responsible for the remaining $25,000.  

Auto liability insurance covers:

  • Damage to other vehicles
  • Property damage such as mailboxes, houses, fences, guardrails, etc.)
  • Personal injuries to other drivers, passengers, or pedestrians
  • Lawsuits that generate attorney fees and court fees

Medical costs for bodily injury and auto repair expenses add up quickly.  If you don’t have adequate coverage, your life’s savings may have to kick in.  You can avoid depleting your assets by making sure you’re well-covered.  

How Does Homeowners Liability Insurance Work?

Homeowners liability insurance protects you if a visitor is injured on your property.  It also covers you if a family member damages another person’s property.  

The two main components of home insurance liability are:

  1. Personal liability – Covers you if you are sued due to an accident.  It pays for attorney fees and damages up to the policies limits. 
  2. Medical expenses – When someone is injured on your property the policy covers their medical expenses.  It also covers lost wages, pain and suffering, death expenses, and libel and slander.

Homeowners liability does not cover injuries to family members, dog bites, intentional injury or property damage, car accidents, or business-related injuries.

How Much Liability Insurance Do I Need?

Generally, choosing more liability coverage than the required amount is a good way to protect yourself against financial distress in the event of a claim.  So, how much liability insurance coverage do you need?  Here are a few suggestions:

To determine how much liability insurance you need, think about what you could lose in a lawsuit.  In the event of a serious accident, the minimum required limits are not enough.  It is possible that your savings and your home could be at risk.

Start by adding up your assets including retirement accounts, savings, home equity, and other property you own.  Next, subtract your debts from that total to get your net worth.  The amount of liability coverage you choose should be at least equivalent to your net worth. 

Liability Insurance from Sandifer Insurance Agency

In addition to being practical, having the right liability insurance coverage gives you peace of mind.  Families and assets should always be protected, especially in today’s environment when everything is becoming more expensive.

If you are shopping for liability insurance, contact Sandifer Insurance Agency before you make a final decision.  We are a local agency, proudly serving Cheraw, SC, and surrounding areas for over 40 years.  As a full-service insurance agency, we offer coverage options for home, business, automobile, farm, business, and life insurance.

Call now to get a free, no-obligation quote from one of our experienced staff members.  With Sandifer Insurance Agency, you have access to some of the most trusted insurance companies in the U.S.  We can tailor coverage to fit your specific requirements.  Let us help you find the coverage that best fits your needs.


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