When you buy a new car and start driving, you will be hit by what can feel like a gauntlet of different expenses.
First there’s the cost of the car itself which is certainly not cheap – even if you go for a second hand vehicle!
Then there’s the cost of your gas, of your maintenance/servicing and of parking. And that’s before we’ve even addressed the cost of insurance.
And insurance is where things really can get expensive. Expensive and complicated with lots of different terms being thrown around that seem like excuses for these companies to charge us more.
What is ‘property damage liability cover’ for instance?
Essentially, property damage liability coverage means that you are covered for any damage that you might cause to third party property. This includes both the vehicles belonging to other drivers and also things like road signs, lampposts and real estate.
The latter aspects are something that a lot of us don’t consider when looking at car insurance. It’s very easy to think of car insurance purely in terms of the other cars on the road – we are insured so that we can pay for the broken windshield we gave that other driver for example.
But what about when you crash into a sign post? Someone has to pay for that and you can be sure it’s not going to be the city or state.
And what about a lamppost? Believe it or not, lampposts are very expensive to replace and if you were responsible for this cost, then it would probably cripple you!
And the same goes for other people’s real estate. While it’s not nice to image, a car accident can sometimes result in one or both vehicles careening straight into the side of a building and interrupting the resident’s pizza night. When this happens, you can incur a huge cost and that’s where property damage liability cover comes in and helps you out.
Why You Need to Know About It
So why then do you need to know what it means?
The answer to that is simple: because although you can’t choose whether or not to have liability coverage, you can nevertheless choose how much coverage you want to have.
Depending on the state you live in, there will be a minimum amount of liability insurance that you require. For instance, in California you are required to have at least $5,000 of cover minimum. In Texas though, this is much higher at $25,000. You can draw your own conclusions as to whether this reflects on the local driving styles…
But if you want to, you can also opt to go much higher than that limit.
And this then is where you need to be smart. The higher your liability coverage is, the more you’ll be protected if should you should accidently drive into the neighbors’ bedroom. But at the same time, higher liability also means higher premiums. The question then is whether you think you can afford to take the risk and whether your cash flow will allow you to pay more.
What’s the right answer?
Well unfortunately, that’s something only you can decide for yourself. Of course the safer option is to pay a higher premium and get more cover. While it’s unlikely, there’s always the small risk you could crash into a Lamborghini and knock it into a row of Ferraris. In that situation, you’ll need all the help you can get.
But on the other hand, most of us will rarely cause that much destruction and thus this could be a good way to save some money.
One thing that’s certain is that this is yet another factor to consider when comparing car insurance policies. Look at the price yes, but also examine how this affects your coverage and whether you’ll be as safe. It might be that two options that look similarly priced offer different levels of coverage – and that can help you to make the right decision for your bank account and for your family!