We get involved in road accidents sometimes when we commute or travel. These accidents often result in damages to our respective cars and also to third parties. Thus, the effect of such accidents is that innocent parties and road users are either seriously affected by damage to their properties, cars or sustain injuries. The liability we incur in the event of such accidents is what and the bid to insure that we are protected in the event of such happening gave rise to liability car insurance. This liability car insurance is an insurance policy that will protect the car owner in the event that innocent third parties are adversely affected by their accidents.

The working is that in the event of the occurring of such accident, the insurance company will step in to provide indemnity or coverage to the policyholder who is involved in an accident by either repairing the damaged property or car of the third party or by paying the medical bills in the event of bodily injuries

LIABILITY CAR INSURANCE

The liability car insurance is a category of liability insurance policy that provides financial coverage to a car owner in the event of an accident for which he is responsible for damages or injury to other parties or properties.

In liability insurance, the policyholder is the “first party”, the insurance company is the “second party” while the others are the “third party”.

This policy is the commonest type of liability insurance. This is to the extent that the policy is mandatory in most countries of the world if not all. The policy represents the least form of car insurance the law requires car owners to buy.

TYPES OF LIABILITY CAR INSURANCE

There are two types of this policy and these are;

Bodily injury liability.
Property damage liability

Bodily Injury Liability

This is the type of liability car insurance policy that emanates from bodily injury to third parties. The level of coverage could include the cost of medical treatment, of prescription drugs, lost wages and other sorts of loss or damage arising from the accident.

Property Damage Liability

This type offers coverage for costs resulting from damages to third parties’ cars or other properties. The coverage may also include loss as a result of damage to the properties of third parties.

BENEFITS OF LIABILITY CAR INSURANCE

There are a lot of benefits for buying the liability car insurance plan and some of them includes;

Compliance with legal requirement

In most countries, buying this class of insurance policy is a mandatory requirement of the law. T In these places, it is compulsory that a car owner must purchase liability car insurance policy before he will be able to drive the car. In Finland for instance, to enable you drive your vehicle, you must have valid liability car insurance policy.

Customer satisfaction

There are cars that are used for commercial purpose. Thus, the presence of this type of policy will provide satisfaction and peace of mind to your customers.

Provision of insurance coverage to the policyholder against damage to property or injuries to third parties

Insurance coverage against legal liability

It provides insurance protection to policyholders against legal liability arising from of law suits by third parties.

Peace of mind.

Buying a liability car insurance policy provides the policyholder with peace of mind. This comes from the certainty that your future is guaranteed in the circumstances where the insured risks happen to you.

Financial Stability

Liability car insurance policy guarantees financial stability to the policyholder. The monies that could have been spent by a policyholder due to loss are taken care of by the insurance policyholder.

Similarly, the Insurer plays significant roles in the stability of financial systems. This happens as a result of their huge investments in the financial markets from the premiums of policyholders. Insurance companies also contribute to financial stability by brokering links between the Policyholders and the banks. And as well ensure the financial stability of the homes through the insurance of their risks and payment of indemnity.

Cheap

The liability car insurance plan is cheaper when compared to other category of car insurance policy such as the comprehensive car insurance policy. It also requires less documentation or paperwork since it is for a third party.

DISADVANTAGES OF LIABILITY AUTO INSURANCE

While this insurance policy is beneficial in a good number of ways, it however still has some disadvantages. Some of them include:

The policy only offers insurance coverage for loss or damage to a third-party or their properties. Thus, the plan does not cover any damages or loss to the policyholder and/or their cars. Therefore the policyholder will have to pay out of his own pocket to take car of his personal loss, or for medical bills.

This policy only offers limited insurance coverage unlike the comprehensive car insurance policy

Conclusion

It is important to note that while the policy provides coverage against legal liabilities and to comply with the law and other damages listed above, this policy, however, does not provide any coverage for the policyholder when an accident occurs. However, it provides for the third parties.

Consequently, it is advisable to secure a policy that provides coverage that is comprehensive and covers all parties.