If you cause an auto accident, you could be accountable for the losses of the other people concerned. A claim could be made or a lawsuit filed against you for those losses. You may well have to pay not only for the property damage you cause, but in addition for the medical expenses, lost income, and pain and suffering of any injured person. The sum of money you could have to pay could be considerable.

If you don’t have auto insurance, anything of value that you possess, together with your home, investments, future wages, and other assets, could be taken to pay for those losses.

Auto liability insurance can help look after you so that this doesn’t occur. Auto Liability insurance also pays for a lawyer to defend you against any claim or lawsuit that may be payable under the policy. You can also buy car insurance to cover damages to your auto. This elective coverage will help pay for your losses whether or not you were at fault.

Auto insurance, or for that matter any form of insurance, is based on the assumption that only a small fraction of all drivers will be involved in accidents.

The premiums paid by all drivers throughout the year are used to pay for the losses of those drivers who have accidents.

When you purchase auto insurance, you obtain financial protection in case you become involved in an accident.

You also make certain that a person injured through your mistake will recover for losses you cause. Most states have a financial responsibility law.

It is intended to make sure that any motorist licensed to drive has insurance or sufficient money to pay for damages to others that might be caused by a motor vehicle. These requirements can be met through insurance, a surety bond, or self-insurance.

If you choose to satisfy the requirements of the Financial Responsibility Law by buying auto insurance, your policy ought to include three major parts—liability insurance for bodily injury, liability insurance for property damage, and uninsured motorist coverage.

When referring to liability limits, the insurance industry uses a contraction or shortened form that can be confusing.

The designation of $25,000/$50,000/$10,000 (or 25/50/10) or comparable designations refer to the highest amounts that an insurer will pay for the three basic liability coverages.

The first number ($25,000) refers to the limit on bodily injury expenses coverage per person.

The second amount ($50,000) refers to the limit on bodily injury coverage per accident where two or more people have been injured. For more information please visit http://www.geico.com/

The third amount ($10,000) refers to the limit on property damage coverage per accident.

Bodily Injury Liability Coverage This coverage does not protect you or your car directly. If you cause an accident injuring other people, it protects you against their claims up to the stated amounts for medical expenses, lost earnings, pain and suffering, and other losses.

It will also typically pay if the accident was caused by a member of your family living with you or a person using your car with your approval.

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