Automobile insurance policies in Alabama are designed to provide coverage to persons that are injured in motor vehicle wrecks or when a vehicle is damaged. Every policy may contain one or more of several different types of coverage. These coverages most often include liability coverage, medical payments coverage, collision coverage, and underinsured/uninsured motorist coverage. Policies may also include provisions for rental insurance or loss of use.
Liability coverage is the type of coverage that is most familiar to most drivers. Your liability coverage provides protection for you if you are the driver of a vehicle that is responsible for or “at fault” for a collision. This coverage will pay for the damage caused to other vehicles and will provide compensation for bodily injury caused to other people by the wreck. Keep in mind, however, that the amount your insurance company will pay for damages is not unlimited. Alabama has a mandatory liability insurance law that requires a minimum coverage of $25,000 per person and $50,000 per incident for bodily injury and $25,000 per incident for damage to property. A $25,000 per person policy limit means that the most anyone injured person can collect under the policy is $25,000. If there are only two injured persons, they can each make a claim for up to $25,000. However, if there are more than two persons injured, the most the carrier will pay for all claims is $50,000.
Unfortunately, the minimum coverage may not be sufficient to pay for all the harm suffered in a particular wreck. Insurance carriers typically offer policies with per person bodily injury limits of $25,000, $50,000, $100,000, $250,000 and higher. It is important to consider the value of your personal assets when deciding what limit of liability coverage is necessary to protect you and your family. An injured person does not have to accept the policy limits to settle a claim. In the event that the value of an injured person’s claim exceeds the liability policy limits, that person could decide to seek a judgment against your personal assets, including your wages, home, real estate, investment or retirement accounts, and other possessions.