Third Party Liability

The most basic type of automobile insurance for protection in the case of a car accident is third party liability insurance, also commonly known as liability insurance.  It protects you against claims of others who are injured when the collision was your fault.  This is the type of insurance may also be referred to in your list of coverages (Declarations Page or Certificate of Insurance) as bodily injury or bodily injury liability. California law requires all drivers and owners of vehicles to maintain mandated minimum levels of third party liability coverages to protect injured victims in a vehicle collision.  There are penalties for failure to comply with this requirement, include loss of your driver license and forfeiture of your legal right to obtain compensation for noneconomic damages such as pain and suffering in the event you are injured in an accident.

Compensates Third Parties

An important thing to understand about liability insurance is that if compensates only third parties.  It does not compensate the policy holder of other persons who meet the definition of an insured person under your policy of automobile insurance.  That means that if you are injured in a car accident your third party liability limits are not available to you.  They are available to persons other than you and insured persons under your policy.  You would only be able to collection compensation from the third party liability coverage of another person, for example, the driver or owner of the vehicle who caused the collision.

Limits of Coverage

Liability insurance is always purchased in a certain amount, called the limits of liability.  Limits refer to the maximum that an insurer will pay to any person in the event of a car accident and the maximum the insurer will pay in total for a single incident.  The statutory minimum in California is $15,000.00 per person and $30,000.00 per incident.  You cannot obtain a lower amount of coverage.  If your vehicle is loaned or leased, your lender will usually require you to have at least $50,000.00 per person and $100,000.00 per incident.  Many lenders require $100,000.00 per person and $300,000.00 per incident.  Most insurance companies will let you purchase even higher limits, often as high as $300,000.00 per person, $500,000.00 per incident.  If you have significant assets, it is advisable that you carry high limits of liability.

Fault for the Collision

Third party liability is not available if the collision was your fault. That means that if you rear-end someone on the freeway because you were not paying attention to the road, you will not be able to bring a claim against the other driver’s policy.  If you were partly responsible but not fully responsible for causing the rear-end collision, for example, if the person in front of you slammed on the brakes and you rear-ended them, then you can still bring a claim but your recovery will be reduced proportionately by the percentage of the fault that is attributed to you.

Relatives and Household Members

With respect to an insured vehicle that is named under your policy, it is not just you and the named vehicle operators protected by your third party liability insurance coverage.  Under most policies, your relatives or other household members are usually covered.  Also, a friend who is using your vehicle with your permission will typically be covered.  But keep in mind, relatives, household members, and friends (permissive users) are covered under your policy only if they are driving or occupying an insured vehicle.  In contrast, you and persons named on your policy are covered regardless of what vehicle you are in at the time of a car accident.