Most states in the U.S. require bodily injury liability coverage. This kind of insurance covers the other driver, passengers in his car and the passengers in your car. Although it doesn't cover the injuries of the insured, it does help to protect his assets from lawsuits in the event of a car accident.
An important factor to consider when deciding how much liability coverage to buy is the amount of your assets. If you have very little in terms of assets then you might not need very much in terms of coverage. However, if you are a millionaire, you will want to make sure that you have enough coverage to prevent you from losing a sizable portion of your wealth because of a lawsuit resulting from a car accident. People with substantial assets may also want to make sure that they have good liability coverage on their homeowner's policy and might want to consider an extra umbrella policy designed to pay a variety of liability claims.
Bodily injury liability insurance is an important consideration even if you are a very careful driver or live in a no-fault state. Even careful drivers get into accidents and make mistakes that could result in liability. It also pays to remember that you can get sued even if the accident wasn't your fault.
No-fault states also require bodily injury liability coverage. This might seem strange because no-fault states limit the rights of an accident victim to sue the other driver. However, there are still cases when a lawsuit can proceed, such as when the injuries are especially severe or when the total costs exceed a certain threshold.
It really pays to do some research and make sure that you have adequate liability coverage. Most states require a certain level of coverage, but it's often a good idea to get much more than is required.
The liability coverage, the collision coverage and medical coverage of insurance policy pays the expenses due to accidents by auto.