Liability coverage helps protect you from covered damage your car does to others, damage for which you are legally liable and without liability insurance would have to pay out of pocket for damages you cause. In some cases these damages could grow into hundred of thousands of dollars.

Liability coverage is the foundation or basis of an auto insurance policy normally, and is required in most states. State liability laws differ but the most require liability coverage of bodily injury (BI) and property damage (PD).

The purpose of BI and PD is if you are at fault in an accident, your liability insurance will pay for the bodily injury and property damage expenses caused to others in the accident, including your legal bills. Bodily-injury coverage pays for medical bills and lost wages of the person you injured. Property Damage covers you if your car damages someone else's property. Usually it is their car, but it could be a fence, a house or any other property damaged in an accident. It also provides you with legal defense if another party files a lawsuit against you.

Keep in mind that if you cause a serious accident a state's minimum liability insurance limits may not cover you adequately. In most states drivers are allowed to sue other drivers who injure them in car accidents. If you are sued and your liability insurance limits are not high enough to pay for all of the damages, your personal finances could be at risk.

For an auto insurance quote for your state's minimum liability limits click here.