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Liability car insurance

Most states' financial responsibility laws require that drivers buy two types of liability car insurance coverage in order to operate a vehicle on the roadway.

  • Bodily injury liability car insurance pays the medical bills of individuals you are found liable for injuring with your car.  
  • Property damage liability car insurance pays to repair or replace cars or other property that you hit with your vehicle.

Details on both types of liability car insurance are below.

What does liability car insurance do?

Bodily injury liability (BI) pays, up to your policy limits, for injuries or death that you (the policyholder), or other drivers covered by your car insurance policy, are found responsible for after a motor vehicle accident.  Policy terms vary but typically bodily injury liability coverage will pay, up to your policy limits, for:

  • Medical expenses
  • Funeral expenses
  • Loss of income
  • Pain and suffering
  • Legal defense if a lawsuit results from the auto accident

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Policy limits for bodily injury liability are per person and per accident and coverage is written as such.  For example, $25,000/$50,000 means that the maximum payout per person is $25,000, and the maximum payout for all people injured in one accident is $50,000.  This coverage may also be simply written as 25/50.

Bodily injury liability does NOT cover your injuries, only the injuries of others that you are liable for.  For your personal injuries to be covered, you would need coverages such as personal injury protection (PIP) or medical payments (MedPay).

Property damage liability (PD) pays, up to your policy limits, for damages to someone else’s property that you (the policyholder), or other drivers covered by your car insurance policy, are found responsible for after a motor vehicle accident.

Property damage typically is damage to another car, but property damage liability also covers damages you may cause to someone’s house, tree, fence, guardrail, pole, etc.

Property damage liability provides you with legal defense if another party files a lawsuit against you regarding property damage that resulted from an auto accident.

Property damage liability does NOT cover in any way damages to your own vehicle.  For such coverage, you need physical damage coverages of collision and comprehensive.

Is liability car insurance mandatory?

Yes, in most states bodily injury liability and property damage liability are required as part of the minimum auto insurance coverages you must carry as a car owner.  To see your state's requirements, click on State Car Insurance at the top of this page.

Car insurance companies normally require that you carry the same level of liability coverage on each vehicle listed on your policy.  In some states, you must carry the same liability limits on all cars that you own.  Even if the state does not require this, some insurance companies will.

A few states do not require bodily injury liability coverage because they have what are known as no-fault laws. Under those rules, drivers must carry what is known as personal injury protection to pay for their own injuries or those of their passengers. Once those limits are exceeded, you are personally liable for the costs of treating the injuries you cause.

Even in states with no-fault laws, most people buy bodily injury liability insurance.

Recommended limits for liability car insurance

In many states the legal minimum is not enough to pay for serious injuries or to replace a late-model car. It is only enough to drive legally. Buy the minimum only if you have no savings or home to shield from lawsuits.

The Insurance Information Institute (III) and other insurance industry experts recommend motorists carry bodily injury liability coverage of $100,000 per person and $300,000 per accident (referred to as 100/300 coverage). For property damage liability coverage, $50,000 or above is suggested.  If you can afford higher limits, that is even better for the protection of your assets. Liability insurance beyond these amounts tends to be very inexpensive.

What happens if I don’t have liability car insurance?

If you don’t carry liability and the state requires it, then penalties can be handed out, such as fines and suspension of your license, and/or vehicle registration.

Also, without bodily injury liability and property damage liability coverage on your car insurance policy, you will be held personally responsible for any injuries or damages you cause to others in an auto accident.  This could mean you will be forced to liquidate property, savings and other assets in order to pay for a judgment against you.

If you do carry bodily injury liability coverage, but with low limits, you still could be putting yourself at risk financially, since if you cause a serious accident where injury expenses exceed your limits you can be held responsible for the amount above your limits.

The same applies to property damage liability insurance. Every state requires that you take financial responsibility in the event of an accident. If you have very low limits on your property damage liability coverage, you are personally liable for the amount over and above what your insurance pays.

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