Liability car insurance: What it covers, what it costs by state

Most states’ laws require drivers to buy two types of liability car insurance coverage in order to drive legally.

• Bodily injury liability car insurance pays the medical bills of people 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.

What does liability car insurance cover?

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

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 coverage (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 collision coverage and comprehensive coverage.

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.

Liability coverage at a glance

Bodily-injury liability covers, up to your Limits:

• Pays for damages you cause to others — covers their medical bills and lost wages

Property-damage liability covers, up to your Limits:

• Pays to repair or replace property that you destroy — includes other cars.
• If you are sued after an accident, can also pay for “pain and suffering”

Liability does not cover:

• Damage to your own car from an accident.
• Your injuries
• Damage to your car from animal strikes, hail, fire, vandalism or flooding
• Theft

Learn more about liability coverage

• Why you should raise your liability insurance limits
• How does liability insurance for teens work?
• Do I need full coverage insurance on a financed car?
• Broad-form insurance: What is it and how much does it cost?

How much does liability car insurance cost?

The cost of liability insurance depends on how much coverage you get, in addition to other factors, such as your age, where you live, your driving record, and other variables. To give you an idea of how much liability costs for the average driver, here are rates based on a 2020 CarInsurance.com rate analysis.

For example, listed below is the average cost of car insurance for three coverage levels, as follows:

• State minimum, this varies by state, and many states have super low limits, but a typical amount is $25,000 for medical bills for injuries in an accident you cause, up to $50,000 per accident, with $25,000 for property damage you cause (25/50/25)
• Liability limits of $50,000 for injuries you cause in an accident, up to $100,000 per accident, with $50,000 to pay for property damage (50/100/50)
• Full coverage with comprehensive and collision, which cover damage to your car, carrying a $500 deductible, $100,000 for injuries you cause in an accident, up to $300,000 per accident, with $100,000 for property damage (100/300/100)

Based on CarInsurance.com’s rate analysis, you pay:

$70 (about $6 monthly) more a year to bump coverage to 50/100/50 from state minimum

$1,184 ($99 monthly) more a year to bump coverage to 100/300/100 from state minimum

States that have the lowest and highest average cost for state minimum liability insurance are:

Drivers in the following states pay the least and most for liability limits of 50/100/50:

Why do rates vary by state?

Car insurance rates are based on many factors, chief among them are where you live. Some states have more uninsured drivers on the road, which typically leads to higher overall rates. Additionally, urban areas tend to have more cars on the road more often than rural areas. That leads to an increased number of accidents, theft and vandalism. The more claims made in an area, the higher the rates will be.

Your state auto insurance laws also play a role in what you pay. The amount of coverage you’re mandated to buy under law varies among states. Also, some states allow insurers to consider your credit history when calculating your cost, while others don’t allow it.

Increasing your liability protection is generally affordable

Liability insurance is the heart of any car insurance policy — it is required to drive legally and pays for damages and medical bills of others when you cause an accident. However the state minimum required under law is rarely enough to protect your assets and savings if you cause an accident. If the repairs and bills add up to more than your liability limit, you are responsible for paying the difference. That’s why it’s recommended to buy as much liability coverage as you can afford. Thankfully, increasing your liability limits — the amount your carrier pays out — isn’t a budget-buster. You’ll see below that in most states the cost to boost your coverage is under $100, in many states is less than $50.

To see what the average driver pays for liability coverage in each state, and how much more you pay to boost your coverage, refer to the table below.

How much liability insurance do I need?

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 $100,000 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.

Recommended limits for liability car insurance

To see what you can expect to pay, here are average car insurance rates by state for the recommended liability limits of 100/300/100. Optional comprehensive and collision are also included in these rates, which are typically purchased with these liability amounts. Enter your state in the search field to find your rate. The average rate nationwide is $1,758.

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.

Or, if your spouse runs into your vehicle with his car, you normally can’t make a claim against the liability coverage on his car. Car insurance policies are usually written so that liability coverage protects members of your household against claims brought by people who are not part of your household.

If you have only liability insurance, your vehicle isn’t covered in any way. If you’re in an accident but not at-fault, then you can use the at-fault party’s property damage liability to make a claim for your vehicle’s damages, or its ACV, if your car is a total loss.

To have coverage for your vehicle when you’re the one at-fault in an auto accident, you must have collision and comprehensive coverage.

For accidents with other vehicles or objects, you’d use collision coverage to pay for your damages or ACV. Comprehensive insurance covers damage to your car from fire, floods, hail, vandalism, animal strikes and also covers theft.

How does liability insurance work with collision insurance?

Both property damage liability and collision insurance pay for damages to cars from an auto accident but are claimed differently.

Your liability coverages – property damage and bodily injury – protect you when someone files a claim against you for an accident you caused.

Your collision covers your car for damages it receives when it hits, or is hit by, another vehicle or object, regardless of fault.

So, you can file a claim against your collision coverage for any damages your own car sustains, but the other driver in an accident you caused would file a claim against you that would be covered by your liability insurance.

Collision also differs from property damage coverage because it comes with a deductible. A deductible is the amount you must pay out of pocket before your insurance benefits kick in.

Thus, if your car’s damages are $1,000 and your deductible is $500, your collision coverage will only pay $500 toward the cost of repairs – and only after you first pay out your $500.

Your car insurance company will pay for the other party’s repairs through your liability coverage without a deductible being due.

What is the average property damage liability claim amount?

Among property damage liability claims, the average amount paid in 2018 was $3,593, up 3.2% annualized from $2,792 in 2010. The median payment in 2018 was $2,165, according to a November 2020 report, the latest data, from the Insurance Research Council (IRC).

The state with the highest average property damage liability payment was Rhode Island, with an average of $3,669 across the three claim years studied, 2010, 2014 and 2018. Rhode Island was also the state with the largest increase. The annualized percent change in average payment in the state from 2010 through 2018 was 6.3%. Other states with relatively high average PD liability payments included Arkansas ($3,618), Alaska ($3,581), and Louisiana ($3,546). Among the states with low average payments were the District of Columbia ($2,371), Vermont ($2,518), and New Hampshire ($2,698).

How much property damage liability should I have?

It’s recommended that you get $100,000 in property damage coverage, as the cost to repair cars is trending upwards now that high-tech parts are common even among non-luxury models. If you cause an accident and the other driver files a property damage claim against your policy, low limits can easily be exceeded, leaving you to pay the difference between the repair bills and your insurer’s pay out.

Expenses for parts made up 53% of estimated repair costs in 2018, and labor made up 47%. Newer vehicles tended to have a higher percentage of parts expense. For vehicles from model year 2014 or newer, parts expenses accounted for 57% of estimated repair costs; among vehicles from model year 2013 or earlier, the share was 52%.

The average policy limit covering PD liability claims was $81,359 in 2018, according to the latest data from the IRC. From 2010 through 2018, the average limit increased just 0.6% annualized, while the average payment rose 3.2%. Nearly one-quarter (22%) of PD liability claims in 2018 were paid under policies with limits of $25,000 or less. Another 29% were covered by policies with limits up to $50,000, and another 44% by policies with limits up to $100,000. Just 4% of claims were from policies with limits higher than $100,000.

State mandatory insurance laws set minimum limits for PD liability coverage, ranging from a low of $5,000 to a high of $50,000. In 2018, 13% of PD liability claims were covered under policies with limits equal to the minimum for the state where the accident occurred. This was a slight decline from 2010, when 15% of claims were from minimum limit policies.

Will my full coverage car insurance cover an accident I had while I was driving a car owned by a friend, who only had liability insurance?

Car insurance follows the car, not the driver. Your comprehensive, collision and liability insurance covers only your own car; they don’t extend to other vehicles and will not cover your friend’s vehicle or become secondary insurance behind another vehicle’s primary insurance. Your friend’s liability coverage would be “primary,” and your liability coverage would be “excess or secondary” to the liability coverages.

— Michelle Megna contributed to this article.

Laura Longero

Executive Editor

Laura is an award-winning editor with experience in content and communications covering auto insurance and personal finance. She has written for several media outlets, including the USA Today Network. She most recently worked in the public sector for the Nevada Department of Transportation.