Auto liability insurance protects you in case you cause damage to another person or his property. Let’s say you cause an accident in which the other driver is seriously injured. He could sue you for damages such as medical bills, lost wages, and pain and suffering. If you end up owing such damages, your liability insurance will cover you to the extent of your policy.
There are two kinds of auto liability insurance – bodily injury and property damage.
Bodily injury liability covers other people’s bodily injuries or death for which you are responsible. It doesn’t cover you or other people on your policy, and neither does it cover your vehicle. If you see two coverage limits, the first refers to the maximum amount that will be paid per person, and the second amount refers to the maximum that will be paid per incident.
Property damage liability, on the other hand, covers you for damage your car causes to someone else’s property, such as their car, house or other property that you damage. Both kinds of insurance (bodily injury liability and property damage liability) also provide you with a legal defense if another party in an accident sues you.