Auto liability insurance — the basics


Below you can find the core qualities of your auto liability coverage:  (1) who might be covered; (2) what triggers your coverage; (3) how your insurer must help you with covered claims; and (4) how much it might have to pay to resolve a claim.  Policies have some tricky aspects, with twists and turns that could make hiring a lawyer worthwhile, but this will help you handle the basics when an accident happens.



Who might be covered by my policy?


Auto liability policies in Virginia (and many other states) always covered the named insured or named insureds, no matter what car they might be driving.  The declarations for the policy (usually the first page) list who the named insureds are.


For cars owned by a named insured, residents of the same household as a named insured are also covered, and so is anyone else using such an auto with the named insured’s permission.  (Who is a resident of the same household can depend on the facts.)


For accidents involving cars not owned by the named insured, relatives from the same household are covered, if they have the owner’s permission.



What triggers my liability insurance coverage?


Your liability insurance comes into play when someone claims you physically hurt them or damaged their property in the course of using a car.  If that happens, and no exclusion applies, your carrier owes you two different duties:  (1) a defense; and (2) indemnity.



The duty to defend


When you face a lawsuit, or even a demand for money, your policy probably requires your insurer to hire a lawyer to help defend you against that demand or suit.  That, in itself, can be valuable, as a defense lawyer’s fees can stack up quickly.  As soon as you get any such demand or suit, call your carrier and ask for a defense.


If your carrier agrees to defend you, but sends a letter saying it will “reserve its rights” or otherwise questions coverage, pay close attention.  In fact, you should probably click here and read our article on the topic



The duty to indemnify


“Indemnify” is not a word most people use every day.  What this really means:  if the demand or suit against you is covered, your carrier must pay any verdict against you, up to your policy limits.  If there is risk of a verdict beyond policy limits, your insurer may have some duty to settle the case if it has a chance to settle within those policy limits.  If it has that chance to settle such a claim against you, and you have assets that could be at risk if there is a later verdict for more than your limits, call a lawyer.  The issues regarding the insurer’s settlement obligations can be complicated.



Policy limits


Know your policy limits.  That is the most that your carrier typically must pay when you face a claim or lawsuit.  Generally, the higher your limits, the better, as you face less risk of a verdict over those limits.  (See our article on the topic.)  If you get such a verdict against you, your personal assets could be at risk.