Liability Coverage

What Is Liability Coverage?

Liability coverage protects you against financial loss in the event you are in an accident involving your owned or leased commercial vehicle and are found to be responsible for the injuries to others involved. Liability coverage has two components—bodily injury coverage and property damage coverage.

The Bodily Injury (BI) portion of your liability coverage will pay for the related expenses if you cause an accident that injures or even kills another person. These expenses include hospital, medical bills, rehabilitation, long-term care, funeral expenses, loss of earnings, pain and suffering, and other expenses.

The Physical Damage (PD) portion of your liability coverage will pay for the expenses connected to the damage incurred to another person’s property. These expenses could be the repair or replacement costs of damaged items. These can include another vehicle, houses, lamp posts, street signs, fire hydrants, etc.

Liability insurance will also pay for any legal defense costs you may incur should you be sued because of your involvement in an accident.

Who Needs Liability Insurance and How Does It Work?

All drivers need liability insurance. Liability insurance is required by law.

Liability insurance requires you to set limits. These limits come in two flavors—split limits and combined single limits (CSL). Let’s look at these limits more closely.

Split limits are defined by three numbers such as $50,000/$100,000/$25,000.

  • In this scenario, $50,000 would be the most an insurer would pay each person in an accident for bodily injury (BI) coverage.
  • $100,000 would be the most an insurer would pay all persons in total in an accident for bodily injury (BI) coverage.
  • $25,000 would be the most an insurer would pay for all property damage (PD) in a single accident.

Combined Single Limits (CSL), on the other hand, are represented by a single number such as $1,000,000. In this case, $1 million is the maximum an insurer will pay for all injuries or damages sustained in an accident.

What else do I need to know about liability coverage?

  • If one vehicle in your fleet has liability coverage, then all vehicles must have liability coverage.
  • Unlike physical damage coverage, the selected liability coverage for all vehicles must be the same.
  • In the case of split limits, your property damage limits cannot exceed your bodily injury per person limits.
  • Each state sets rules about how much liability coverage residents are required to have. Forge Insurance has underwriters who can help you select the type and amount of liability limits that is best for your individual situation and your state.


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