Liability coverages under an auto insurance policy are there to help 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 hundreds of thousands of dollars.

Liability coverage is the foundation or basis of an auto insurance policy normally, and is required in all states that require insurance. 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 damages someone else's property that you caused. 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.

Liability is different than Uninsured Motorist or Comprehensive because these latter coverages are there to protect you and your vehicle instead of other people that you harm which your Liability coverage covers.

There are two types of Uninsured Motorist coverages however the most common is Uninsured Motorist Bodily Injury (known as UM or UMBI). With UMBI coverage you have coverage for injuries you sustained due an at-fault driver who was uninsured. With Uninsured Motorist Property Damage (UMPD) your vehicle has some coverage if damaged by an uninsured motorist.

Uninsured Motorist Bodily Injury covers you, the insured members of your household and your passengers for bodily/personal injuries, damages, or death caused by an at-fault uninsured or hit-and-run driver. If you are involved in an accident where the other driver is at fault but has no insurance, your policy will cover your medical expenses, up to the limit on your policy.

UMPD covers your auto when property damage is sustained by an insured and the negligent operator does not possess insurance. If you do not have Collision coverage, Uninsured Motorist Property Damage coverage pays up to a certain amount for repairs to the insured car (some states have limits at $3500, some are lower and some are higher). If you have Collision coverage, Uninsured Motorist Property Damage coverage only pays your Collision deductible (in some states).

You did not ask about Collision coverage but since it is Physical Damage coverage like Comprehensive I will explain Collision to you as well so you see how it differs from UMPD and Comprehensive. Physical Damage coverages are ones that cover your vehicle from damages it sustains.

Collision covers damage to your car when your car hits, or is hit by, another vehicle, or other object. Comprehensive covers your vehicle, and sometimes other vehicles you may be driving for losses resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen; or damaged by flood, fire, or animals.

Comprehensive (also known as Other Than Collision) and Collision covers your own property not the other person which is covered by your Liability coverages. Both physical damage coverages of Collision and Comprehensive pay to fix your vehicle less the deductible you chose at the inception of your policy. Liability coverages do not come with a deductible amount.

For more information on the definitions of insurance coverages please view our Learning Center. Also learn about car insurance for all different life situations and different life stages so you can be protected and informed.