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Liability car insurance is the most crucial component of your car insurance policy. It’s what covers the cost if you cause an accident and hurt someone or damage their property.
That means if you’re at-fault for a car accident, liability insurance would help pay for the other driver’s car repairs, medical bills, legal costs, property damage, and lost wages (if that person is badly injured and forced to miss work). Every state that requires car insurance mandates that you have liability coverage, which will include bodily injury coverage and property damage coverage.
Car accidents are expensive, and costs can run into the tens and sometimes hundreds of thousands of dollars. In a worst-case scenario, going without enough liability coverage could potentially bankrupt you if you’re sued and forced to pay for damages. That’s why it’s important to understand how liability coverage works and how much coverage you need when buying car insurance — you don’t want to be over-insured but you also don’t want to be underinsured in the event of an accident.
Liability insurance is one of the most crucial components of car insurance. Every state that mandates car insurance requires drivers to have a minimum amount of liability coverage
It’s a good idea to buy more liability insurance than just your state’s minimum, so you’re not on the hook for paying tens of thousands of dollars out of pocket after an accident
If someone borrows your car, your liability coverage also extends to them. If they get into an accident while driving your car, your liability insurance would cover damage they caused
If someone borrows your car, your liability coverage also extends to them, so if they get into an accident while driving your car, your liability insurance would cover damage they caused
Car insurance policies are made up of different types of coverage that offer different forms of protection. Liability coverage pays for the costs of property damage and bodily injury that you cause to another driver and their vehicle. For example, if you’re at fault for an accident, liability coverage may cover:
The medical expenses of the other driver or their passengers if they’re injured in the accident
Cost of property damage and repairs to the other driver’s vehicle
Legal fees if the other party sues you
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Liability coverage itself is broken into two categories: liability insurance for bodily injury, and liability insurance for property damage.
Here’s a breakdown of how standard liability insurance coverage works:
Bodily injury liability insurance covers the cost of the other driver’s injuries if you’re in an at-fault accident. That means if you cause a car accident, bodily injury liability insurance would protect you against the injured party’s claims for expenses after the accident, such as their medical bills, lost wages, pain and suffering, and sometimes legal fees related to injuries. Exact coverage details vary from state-to-state and policy-to-policy.
One rule of thumb for prospective buyers is to purchase the highest bodily injury liability coverage limit you can afford. If your coverage isn’t enough to pay for all injury-related costs in an accident you caused, you are susceptible to lawsuits for the remainder of what you owe out, putting financial assets (like your home) in jeopardy.
Property damage liability coverage pays for the damage you cause to someone else’s property with your car. Typically, property damage liability insurance covers repair and/or replacement for damage you cause to the other person’s vehicle, but it can also pay for damage to a house, buildings, lampposts and telephone poles.
Exactly what specific types of property are covered may vary according to your policy, so be sure to read the contract carefully or talk to your insurance agent.
Liability car insurance does not cover damage to your own car, and won’t cover your medical expenses if you get injured in an accident or collision. That means if you get into a car accident and it’s your fault, liability coverage won’t cover any of the costs to repair your own vehicle and it also won’t cover your hospital stays or medical bills.
If another driver is at-fault for the accident, you’d file what is called a “third party claim” with their insurance company, who will reimburse you for the costs of repairs or injuries.
To get coverage for your own car, you’ll need to add on collision coverage or comprehensive coverage to your policy. Those coverages, often paired together, pay for damage to your own car, either from a car accident or from another type of incident, like if a tree branch falls on your car.
Liability coverage is sold taking three liability instances into account: the maximum amount you’ll need to cover a single person’s injuries; the maximum amount you’ll need to cover multiple people’s injuries; and the maximum amount you feel you’ll need to cover the total property damage in an accident. They are typically displayed as three amounts separated by slashes, so if you purchase liability coverage that looks like 50/200/50, that would mean you have coverage of:
$50,000 in bodily injury liability per person
$200,000 in total bodily injury liability per accident
$50,000 in property damage liability per accident
It’s generally suggested that you spend more on liability insurance if you can’t afford a hefty medical bill, and many states require liability coverage in the range of $25,000 to $50,000. Although state minimums will usually cover routine fender benders, accidents involving serious property damage, injuries, or even fatalities could end up being too high for you to afford to cover the rest on your own after the minimum is paid out.
As mentioned, car insurance requirements vary by state, and in order to be fully protected you’ll likely need more coverage than just your state’s minimum liability insurance requirements.
Below is a table outlining the standard liability (bodily injury and property damage) coverage requirements in every state where it’s legally mandated. Keep in mind that your state may also require you to have other types of coverage, like personal injury protection (PIP) or underinsured/uninsured motorist coverage. To learn all of your state’s insurance requirements, check out our state-by-state auto insurance guide here.
|State||Bodily injury liability per person||Bodily injury liability per accident||Property damage liability per accident|
|District of Columbia||$25,000||$50,000||$10,000|
|Florida||Optional, unless otherwise specified by the state||Optional, unless otherwise specified by the state||$10,000|
|New Hampshire*||Optional; or $25,000||Optional; or $50,000||Optional; or $25,000|
|Virginia**||Optional; or $25,000||Optional; or $50,000||Optional; or $20,000|
* New Hampshire doesn’t legally mandate drivers to carry car insurance, but if you do purchase insurance you must meet the minimum requirements listed above. If you get into an accident in New Hampshire and don’t have car insurance, you’re still legally responsible for paying for any injuries or property damage that you caused.
** Instead of car insurance, Virginians can choose to pay the Virginia DMV $500 to legally drive on public roads. This fee does not cover you in the event of an accident, which means you’ll be on the hook financially for paying for any accidents that you cause.
In “no-fault” states, there is no need to determine who was at fault for an accident to receive payments for injury claims. No-fault liability car insurance — currently law in 12 states — requires each party file a claim with their individual insurer, which limits lawsuits, but understandably brings questions of fairness into the fold, as irresponsible motorists are sometimes said to get off “scot-free.”
While no-fault states don’t completely eliminate the chances that faulty drivers will get sued, it does limit the circumstances under which they can be sued.
If you have a no-fault policy, your policy’s personal injury protection (PIP) can help pay for injuries, damages, or accident-related lawsuit expenses, but PIP coverage has limits and won’t protect you against lawsuits or accidents that run too high and exceed coverage limits. Residual liability insurance can fill that gap and increase protection in the event that multiple people are affected by an accident and it results in several injuries or death.
Liability insurance is required in most states, and it covers the cost of property damage and bodily injury to the other driver and their vehicle if you’re at fault for an accident. Some drivers choose to buy only liability insurance, in order to fulfil their state’s requirements. “Full coverage” isn’t a type of insurance, but a phrase that refers to an auto insurance policy that contains both liability coverage and comprehensive and collision coverage. Comp coverage protects your vehicle if it is damaged while you are not driving, like by a fire or storm, or if it’s stolen. Collision coverage pays for damage to your vehicle in a collision regardless of who was at fault.
If you drive someone else’s car every so often, the car owner’s auto insurance policy will generally cover you while you’re driving their vehicle — even if they’re not with you — but only up to a certain limit. If you frequently borrow or rent cars, you may want to consider non-owner car insurance. It’s usually limited to just liability — bodily injury and property damage — since it’s for drivers who don’t own a vehicle themselves so don’t need other protection for it.
Most car insurance policies also extend liability coverage to rental cars, but you’ll want to talk with your insurance company to determine if the coverage suffices or whether you should add on to your current policy if you’re renting cars frequently or for extended periods. Rental car companies are actually required by law to carry a state’s minimum amount of liability insurance coverage on their cars, so they offer their own liability insurance for a small, per-day fee to cover damage to someone else’s car and/or its passengers in an accident.
An umbrella policy is a type of personal liability insurance policy you can buy separate from car insurance that extends your overall liability coverage. It’s called an “umbrella” policy because it covers everything — it can help pay the costs if you’re in a car accident that exceeds your auto liability limits, but it will also cover your liability if you’re responsible for damage or injury in any other part of your life. It makes sense to consider an umbrella policy if you have a lot of assets to protect.