CarInsurance.com Insights
- State minimum property damage coverage often starts at $10,000 to $25,000. Pennsylvania’s minimum is $5,000 — one of the lowest in the country. Florida requires $10,000. Neither figure comes close to covering the average new vehicle on the road today.
- The average new car now sells for around $49,000. If you total a car worth more than your property damage limit, your insurer pays its cap and stops. The difference is yours to cover.
- The other driver’s insurer can come after you. If you hit a car insured by a major carrier, that company may pursue your wages or assets to recover what your policy didn’t pay. A court judgment can affect your credit for years.
- Substandard insurers are more likely to leave you exposed. Major insurance companies often have arbitration agreements with each other that limit litigation. Budget insurers frequently don’t — making you a more attractive lawsuit target when your coverage falls short.
- Full coverage at 100/300/100 costs between $1,628 and $3,207 annually, depending on your insurer. The difference between a minimum policy and real protection is often less than $200 a year.
Why minimum coverage falls short on today’s roads
Most states require between $10,000 and $25,000 in property damage liability — the portion of your policy that pays to fix or replace the other driver’s vehicle when you’re at fault. Pennsylvania’s minimum is $5,000, one of the lowest in the country. Florida requires $10,000.
Those numbers made more sense decades ago. The average new vehicle now sells for around $49,000, according to Kelley Blue Book data. Even a modest sedan or compact SUV can easily clear $30,000. If you carry minimum property damage coverage and cause a collision with a vehicle worth more than your limit, your insurer pays its cap and stops. Whatever comes next is your responsibility.
The math gets worse with a genuinely expensive car. Hit a $200,000 Bentley Continental with $25,000 in property damage coverage and you’re personally on the hook for up to $175,000. Even totaling a $50,000 family truck leaves a driver with a $10,000 limit exposed by $40,000.
Beyond property damage, bodily injury limits create a second layer of exposure. California updated its minimums to $30,000 per person and $60,000 per accident effective Jan. 1, 2025 — the first change to the state’s requirements since 1967. In a multi-injury accident, even those updated figures can fall short, and whatever isn’t covered falls on the at-fault driver.
“[Given] the current values of vehicles, [state minimums are] extremely antiquated values of coverage,” said Zack Pope, agency manager at David Pope Insurance in Missouri. “It is significantly easier to see a car on the road that is valued at $100,000 than it has been in the past.”
What happens after your policy limit runs out
Say you carry $10,000 in property damage coverage and total a $200,000 Bentley. Your insurer writes a check for $10,000 and closes the claim. The Bentley owner — or more likely, the Bentley owner’s collision insurer — is now short $190,000 and looking at you for the difference.
That insurer has options. It can pursue wage garnishment, meaning a portion of your paycheck goes toward the judgment until the debt is repaid. It can ask a court to order your assets seized. A large judgment against you — say, $80,000 or more — becomes a matter of public record and can damage your credit for years.
“You should be afraid that you’re going to have your house taken away,” said Lynette Simmons Hoag, an insurance claim attorney in Chicago, of drivers carrying substandard insurance who cause serious accidents.
In practice, how aggressively a claimant pursues you depends on what you have. Insurers and attorneys know they can’t recover money that doesn’t exist. If your only asset is a minimum-limits policy, they may calculate the legal costs aren’t worth it. But “may” isn’t “won’t” — and the calculation changes if you have a house, savings or a salary worth garnishing.
“It’s worth it for them to pursue you, especially at larger levels,” Hoag said.
Why your choice of insurer matters after a serious accident
Not all insurance companies handle post-accident disputes the same way. Many major carriers have inter-company arbitration agreements — informal arrangements to settle claims between themselves rather than take both parties to court. These agreements reduce legal costs for everyone, including you.
Smaller or substandard insurers typically don’t have those agreements. Without one, the other driver’s carrier has no efficient off-ramp and litigation becomes more likely, not less.
“Drivers who thought their car insurance rates were great when they went with a substandard insurer are more likely to be sued because such insurers often don’t have arbitration agreements that larger insurers do to avoid lawsuits,” Hoag said.
This doesn’t mean buying from a major carrier eliminates risk. But it can affect how a claim resolves when your coverage falls short of the actual damage.
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How much does more liability coverage actually cost?
The jump from minimum coverage to meaningful protection is smaller than most drivers expect.
CarInsurance.com editors recommend carrying at least 100/300/100: $100,000 per person in bodily injury, $300,000 per accident total and $100,000 in property damage. That’s enough to cover a serious accident involving an expensive vehicle without leaving your personal assets exposed.
According to data for drivers with no violations driving a Honda Accord LX, a full coverage policy with liability limits of 100/300/100 runs between $1,628 and $3,207 annually, depending on the insurer. At 50/100/50, that range falls to $1,465 to $2,815 per year.
The spread between companies is significant. USAA comes in at the lowest at $1,628 annually (but is only available to members of the military community and their families); Farmers reaches $3,207 for the same coverage. Travelers, GEICO and Progressive all fall in the $1,962 to $2,569 range at 100/300/100. That gap underscores why shopping around matters as much as choosing the right coverage level.
The difference between 50/100/50 and 100/300/100 typically runs $100 to $500 per year depending on your insurer. For that cost, your property damage limit doubles — from $50,000 to $100,000 — and your per-person bodily injury limit does the same.
On roads where $50,000 vehicles are the norm and six-figure ones are no longer rare, that extra coverage can keep a single bad accident from becoming a lasting financial problem.
The case for higher liability limits comes down to one question: what’s the most expensive car you might realistically hit? In most parts of the country, $50,000 vehicles are common. Six-figure trucks, SUVs and luxury cars aren’t rare.
Carrying $10,000 or $25,000 in property damage coverage against that reality is a bet you probably don’t want to lose. The cost to raise your limits is modest. The cost of being underinsured in the wrong accident is not.
Frequently Asked Questions:
What happens if I hit a car worth more than my insurance covers?
Your insurer pays up to your property damage limit and closes the claim. If the car you hit is worth more than that limit, the gap is your personal debt. The other driver or their insurer can pursue you through civil court for the remainder — including wage garnishment or asset seizure if a judgment is entered against you.
Can someone really garnish my wages over a car accident?
Yes. If a court enters a judgment against you for damages beyond your policy limits, the winning party can pursue wage garnishment to collect. The judgment also appears on your credit report and can affect your financial standing for years. How aggressively a claimant pursues you depends largely on what assets you have — but drivers with a home, savings or a steady income are more attractive targets.
What is the minimum property damage liability in my state?
It varies. Pennsylvania’s minimum is $5,000, one of the lowest in the country. Florida requires $10,000. California raised its minimum from $5,000 to $15,000. Most states fall between $10,000 and $25,000.
How much liability coverage should I actually carry?
CarInsurance.com recommends at least 100/300/100 — $100,000 per person in bodily injury, $300,000 per accident and $100,000 in property damage. That covers most realistic accident scenarios, including collisions with expensive vehicles, without exposing your personal assets. If you have significant savings or own a home, an umbrella policy on top of that adds a further layer of protection.
Does it matter which insurance company I choose?
It can. Major insurers often have inter-company arbitration agreements that reduce the likelihood of litigation when a claim exceeds your limits. Smaller or budget insurers frequently don’t have those agreements, which can make you a more attractive lawsuit target if you’re underinsured and cause a serious accident.
Resources & Methodology
Methodology
CarInsurance.com commissioned Quadrant Information Services to get car insurance rates. The rates are based on the sample profiles of 40-year-old male and female drivers carrying full coverage policies with limits of 100/300/100 and $500 collision and comprehensive deductibles. Read the detailed methodology for more information.
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