Bodily Injury & Property Damage Liability
Law in each state sets the minimum required financial responsibility when a driver is negligent in an accident. Coverage of most auto policies requires Bodily Injury & Property Damage liability (BI-PD). Most states use a “tort” system of laws where negligence triggers an obligation to pay money for damages or injuries. Some states have “no-fault” laws which makes finding negligence a secondary concern except in circumstances that exceed practical or monetary thresholds. That is why bodily injury & property damage liability coverage is found in both tort and no-fault policies in all fifty states.
BI-PD coverage applies when negligence is established by law whether the policy is issued for Ohio, Michigan, or some other state. The bodily injury liability coverage of your policy pays (generally speaking) when you have been determined to have caused bodily injury in an accident or event. Your coverage can be triggered when it has been determined by a court of law that you are negligent, or by an agreement between your insurance carrier and the person who was injured by your negligence.
There are varying degrees of negligence but in the simplest form, if you have been determined to have been 50% or greater the cause of an accident, you would owe for the injuries sustained by any person. The same basic concept occurs when property damage liability (PD) has been caused. Property damage may occur without a bodily injury occurring, and bodily injuries may occur when no property is damaged in the same event. In no-fault states, the BI/PD coverage is provided on a residual basis. That means that the bodily injury & property damage coverage that is included on your policy only applies to provide protection after primary benefits of no fault coverage have applied first or when certain practical or monetary thresholds have been exceeded.
In Michigan, for example, bodily injuries are first covered by the Personal Injury Protection (PIP) coverage of your own auto policy and when injuries exceed certain threshold of severity and bodily impairment. Then, the coverage of the bodily injury liability coverage will provide protection and pay for the negligence in an accident including the cost of representing your legal interests. There are twelve states with active no-fault laws on the books in the USA. Some states have dollar thresholds (rather than severity thresholds) that apply before any claim for Bodily Injury or Property Damage claims can be sustained. We don’t have a no-fault law in Ohio and consequently, no PIP benefit exists. Instead, Ohio has a tort law system, and consequently, the bodily injury & property damage liability coverage defends allegations of negligence when you are involved in an accident. It still may take litigation or negotiation to determine the extent of liability but the bodily injury & property damage coverage applies up to its limit your purchase on your insurance coverage. No policy provides coverage beyond the limits of protection purchased. Those limits are specified in your coverage documents.
One important benefit that is provided to you that is not listed on your insurance declaration page is the benefit of a defense against the claims when legal proceedings are involved. Defense costs are paid only up to the time your insurer agrees to pay the damages or is ordered by a court to do so. When your coverage limit is exhausted it is then your responsibility to pay all costs to defend yourself and pay all damages that accrue beyond the limits of insurance in your policy. The costs can be substantial and the consequences can result in damages that courts may extract from your income, property, or other assets. It is way better to pay a little more premium and buy bigger limits of bodily injury & property damage liability than to be under insured in these areas.
All states specify the minimum limits of BI-PD that are acceptable. Current minimum limits in Ohio for BI-PD are $25,000 per person, $50,000 aggregate per accident for BI, and $25,000 for PD. If you want more personal attention to your concerns about auto insurance and the proper limits of insurance, contact Terry McCarthy Monday – Friday and between the hours of 9 – 5 most days. Other hours are available by appointment.
Auto insurance has the following coverage parts:
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Bodily Injury & Property Damage Liability (BI/PD)
Uninsured Motorist (UM)
Underinsured Motorist (UIM)
Medical Payments (MP)
Auto Collision
Auto Comprehensive (Other Than Collision)
Uninsured Motorist Property Damage (UMPD)
Towing and Road Service
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