Also known as the “other person” coverage, liability coverage on your policy covers injuries and damages to the other driver and passengers if you were at fault in a car accident. 

It is also a mandated auto insurance coverage in Washington state and several other states.

If you are pulled over during a traffic stop, the proof of insurance that you are required to show must meet the requirement of liability coverage in accordance with your state law. 

There are three coverage limits that you will see on an auto liability policy:

Bodily injury liability is the coverage used to cover all the costs related to injuries of the other party, including medical expenses, lost wages, funeral expenses, etc. Bodily injury liability coverage is also the coverage to cover any judgements or settlements resulted from the accident. 

Under bodily injury liability, there is a limit indicated for each person in the other car(s) and a separate limit indicated per single accident when there are multiple people involved. The per-accident limit is the total amount that your policy will cover for all of the combined costs of bodily injury claims in the same accident.

Property damage liability is the coverage used to pay for repair or replacement of damaged property in an accident, such as the other driver's car, a light pole, a fence, a decorative knome, and etc.

If you were involved in a car accident with another car, your liability insurance will only cover the damages to the other car and it will not cover damages to your own car. 

Collision coverage is the coverage you will use to repair or replace your car if it was damaged in an accident with another car or in a rollover crash. 

If the other driver was responsible for the accident, his/her insurance company will pay for the damages to your car with the liability coverage on his/her policy. 

In order to begin the process, you will need to file a claim with the other driver's insurance company using the information that was exchanged at the time of the accident. 

 Do you know what to do after a car accident? Learn more: After Minor Accident Guide.

In Washington state, the minimum auto liability limits required by law are:

• Bodily injury liability limit per person: $25,000
• Bodily injury liability limit per accident: $50,000
• Property damage liability limit per accident: $10,000

Note that there are a few insurance companies that offer combined single limit auto liability coverage. In these policies, you will see just a single coverage limit that includes all three coverages of a traditional type of policy.

You must also be able to show proof of insurance and it must include the following:

• Name of insurance company
• Policy number
• Effective date of the policy
• Expiration date of the policy
• Description of the insured vehicle including year, make, or model, or name of the driver

Note: Washington state allows electronic copy of proof of insurance, and proof in your phone app is considered legal and can be accepted. 

To choose the proper auto liability limits on your policy, the most important consideration is how a major auto accident can cause devastating financial impacts on you and your family.

If you unintentionally caused a major accident and exhausted the liability limits on your auto policy to cover the injuries and damages of the other party, you are still financially responsible to pay for all remaining costs. This situation could put you in an extremely difficult position of financial hardship and may even have long-term effects such as wage garnishment. 

The general rule of thumb is that the amount of liability insurance coverage should cover the total value of your assets including your home. 

If the total value of your assets is above the maximum auto liability coverage, you may also consider adding an umbrella insurance endorsement that can cover your assets up to $5 million dollars with most insurance companies.