Property damage liability coverage

What does property damage liability coverage do?

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 property damage liability coverage mandatory?

Yes, in most states property damage insurance is required as part of the minimum auto insurance coverages you must carry as a car owner. (See minimum required coverages by state.)

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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.

What happens if I don’t have property damage liability coverage?

If you don’t carry property damage 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 property damage liability coverage on your car insurance policy, you will be held personally responsible for any property damage you cause to others in an auto accident.  This could mean you are forced to liquidate property, savings and other assets in order to pay for a judgment against you.

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

Recommended limits for property damage liability coverage

The coverage limits refer to the maximum amounts that will be paid per accident.  The higher limits you carry the better protection you have for your assets.

The Insurance Information Institute (III) and other insurance industry experts recommend you carry property damage liability limits of $50,000 or above.