Auto Liability Insurance

Auto Liability Insurance, or third-party insurance, pays for damages and injuries to other people (third parties) if you’re at fault in an accident. It covers bodily injury and property damage. Auto Liability Insurance is also referred to as auto liability coverage, broken down into Bodily Injury Liability (BI) and Property Damage Liability (PD). 

• Bodily Injury (BI) Liability: Pays for medical bills, lost wages, and pain and suffering for injured third parties.
• Property Damage (PD) Liability: Pays for repairs to the other person’s car, fences, mailboxes, or other property you might damage with a vehicle.

Auto Liability Insurance protects you when claims arise from your driving. If you lose control of your vehicle and hurt somebody, this insurance is what stands between you and financial hardship or bankruptcy.

With winter driving hazards in mind, it is time to review your Auto Liability Insurance. Most Alaskans first buy automobile insurance when we are “young and poor.” Our interaction with an insurance sales agent goes something like this: “I have no money. Sell me the cheapest coverage that allows let me to legally drive in Alaska.” As a result, insurance sales agents normally sell the “statutory minimum”  “50/100” liability insurance.

Statutory Minimum Is Not Enough

Problems arise when we get older. We are (hopefully) not so poor. Living the American Dream, most Alaskans work and save money. We have a home and are raising families. Through hard work and determination, we have a bit of “heel on our shoes.” Yet, Alaskans continue to drive with the same cheap Auto Liability Insurance that we bought as kids…

If you are over 35 (and certainly if you are over 45) it is time to update your Auto Liability Insurance. Here are our nuts-and-bolts suggestions, after 30 years of reviewing automobile insurance policies. First, talk to your insurance sales agent. An insurance sales agent is trained to help you understand how much insurance is appropriate in your circumstances. It is their job to ask you questions, evaluate your situation, and make informed suggestions. Furthermore, this service costs you nothing. Call your insurance sales agent right now and schedule an “Insurance Review Meeting.”

Auto Liability Insurance Recommendations

If you really don’t want to ask your insurance sales agent (or don’t have one), we recommend 100/300 (that is $100K per person, and $300K per accident) as the absolute minimum Auto Liability Insurance Alaskans should buy before getting on Alaskan roads. We grade 100/300 as C+ coverage. It is far better than 50/100. At the same time, it does not provide much beyond minimal financial protection to Alaskans.

The next step up is 250/500 or $250K per person, and $500K per accident. We grade 250/500 as B+ Auto Liability Insurance coverage. It provides much more reasonable financial protection.

When deciding how much Auto Liability Insurance insurance to buy, the key is realizing you are driving about 4,000 pounds of steel at 55+ MPH on icy Alaskan roads. If you lose control and injure another person be sure you have enough liability insurance to pay the other persons’ medical bills, lost wages, pain, suffering, and disability. If you don’t buy enough liability insurance to cover these claims, the balance of the injured persons’ claims come out of your pocket.

How Much Does It Cost?

IMPORTANT: The cost of Auto Liability Insurance is NOT linear. In other words, 100/300 does NOT cost twice as much as 50/100. Usually, doubling your 50/100 liability insurance should cost you less than $75 every six months. The expensive insurance is the 50/100 statutory minimum coverage that you already bought. Think of it this way… can you financially recover from the significant costs of bodily injury and property damage following an accident without sufficient Auto Liability Insurance?

This Auto Liability Insurance Piece is Part 2 of a 6-Part Winter Insurance Review Series. Check these posts for information about the importance of a Winter Auto Insurance Review, UIM, Medical Payments, Umbrella Policies, and Homeowner Insurance.

Johnson Law has been helping Alaskans for nearly 30 years. It’s who we are. Please call Johnson Law to discuss your auto insurance case: (907)277-3090 or use our online contact form.

And while we hope you never need us… We’re here if you do. ~ Doug Johnson

Image Source: Alaska Car Transport