Automobile insurance is designed to protect you and your vehicle if you're involved in an accident, your car is stolen or vandalized, or it's damaged in a natural disaster. Your policy's personal liability coverage protects you if you're deemed to be at fault in an accident that injures someone else or damages their property. Every state with the exception of New Hampshire has a minimum amount of liability coverage that you're required to purchase when insuring a vehicle.
Key Takeaways
- Personal liability coverage protects you financially if you're at fault in an automobile accident that injures another person or damages someone's property.
- Almost all states require car owners to have liability coverage as part of their auto insurance.
- States also set minimum amounts of liability coverage, but you can—and often should—buy more.
What Is Personal Liability Insurance?
Car insurance policies can feature several different coverage types, including:
- Bodily injury liability
- Property damage liability
- Personal injury protection (in certain states)
- Collision coverage
- Comprehensive coverage
- Uninsured/underinsured motorist coverage
The first two items on that list—bodily injury and property damage—represent the policy's liability coverage.
Bodily injury liability coverage, or BI, covers physical injuries to another person if you're at fault in an accident. So, for example, if you rear-end someone with your car and they experience neck and back pain that requires an X-ray or ongoing treatment, your bodily injury liability coverage could pay for some or all of those costs, depending on your coverage limits.
Property damage liability coverage, or PD, covers damage to someone else's property if you're at fault in an accident. This coverage can extend to another person's vehicle as well as other property, such as fencing or structures. This type of liability insurance covers some or all of the cost of repairing the damage.
Note
Liability insurance doesn't pay for your medical expenses or repairs to your vehicle if you're involved in an accident.Those are covered by other parts of your auto policy.
Personal Liability Insurance Limits
Excluding New Hampshire, every state sets a minimum threshold on the amount of personal liability insurance drivers need to have. Depending on your state's requirements, you may see three different liability limits included on your policy:
- Bodily injury liability limit per person
- Bodily injury liability limit per accident
- Property damage liability limit
Bodily injury liability limit per person
The bodily injury liability limit per person is the maximum amount your car insurance company will pay toward someone else's medical expenses if you're involved in an accident and are at fault. So, for example, you may be covered up to $25,000 per person if an accident results in physical injuries to someone else.
Bodily injury liability limit per accident
The bodily injury liability limit per accident is the maximum amount your insurance company will pay toward medical expenses for a single accident. So, say you have a bodily injury liability limit per accident of $50,000. That's the most your policy would pay toward medical expenses, regardless of how many people were injured in the accident.
Property damage liability limit
Your property damage liability limit is the maximum amount your insurer will pay toward property damages if you're at fault in an accident. If your policy has all three types of liability insurance, it's typical to see these numbers expressed in an abbreviated format. For example, if you have a $100,000 bodily injury liability limit per person, a $300,000 bodily injury liability limit per accident, and a $50,000 property damage liability limit, it might be noted as 100/300/50 on your policy.
Why Do You Need Personal Liability Insurance?
Personal liability insurance is designed to protect you against substantial financial losses associated with an accident that you caused. If you are in an accident and injure someone, resulting in a $50,000 medical bill, you'd be responsible for paying it out of pocket if you don't have bodily injury liability coverage. And if you can't come up the money to pay, you could be sued in court.
Other coverages in your insurance policy serve other purposes. Collision coverage, for example, pays for damages to your car following an accident. Comprehensive coverage can pay for damages that aren't strictly accident-related, such as those caused by falling objects. And medical payments coverage would pay for your own medical expenses if you're hurt in an accident. Your regular health insurance can help pay, as well.
Important
If you have substantial assets that might be at risk in a lawsuit, it's worth considering an additional umbrella policy, which can increase your liability coverage to $1 million or more.
How Much Personal Liability Insurance Should You Buy?
At a minimum, your liability coverage must meet the requirements for your state. The amount you'll pay for this insurance will depend on several factors, including the policy's coverage amounts and your driving record.
In many states, the minimum coverage requirement is 25/50/25, meaning:
- $25,000 bodily injury liability limit per person
- $50,000 bodily injury liability limit per accident
- $25,000 property damage liability limit
But whether those limits are sufficient can depend on a number of things, including your financial resources.
Say you're in an accident that causes injuries to three people. Their total medical expenses come to $75,000. If you have a bodily injury liability limit of $50,000 per accident, you'd have to come up with the other $25,000 yourself to pay their remaining medical bills.
Having more personal liability insurance coverage can help avoid situations where you may be required to pay large amounts out of pocket after an accident. But keep in mind that increasing your coverage limits will also increase your premium costs. If you're unsure of how much personal liability insurance to buy, your insurance agent may be able to help.
FAQs
The minimum amount of car insurance you'll typically need is state-required liability coverage. This allows you to pay for some, if not all, injuries and damages you're liable for in an accident. The most commonly required liability limits are $25,000/$50,000/$25,000, which mean: $25,000 in bodily injury per person.
What does 100,000 liability mean? ›
Suppose your per-accident limit is $100,000. That means if you cause a car accident that injures three people, the most your bodily injury liability would pay for their combined expenses is $100,000 (and only up to the per-person limit for each person injured).
Is 250/500 too much? ›
Yes, 250/500 is enough insurance for most drivers since it exceeds most states' minimum car insurance requirements as well as the median net worth. Still, you should consider getting more coverage if you have a high net worth, to make sure you are completely covered if a serious accident occurs.
What is liability insurance in driving? ›
Liability coverage in your car insurance policy pays for property damage and/or injuries to another person caused by an accident in which you're at fault. This type of auto coverage is required by most states to legally drive your vehicle.
What insurance would you need to cover the damage to your car? ›
Physical Damage Coverage pays the cost of repairs or replacement of your car, minus your deductible. Collision covers damage to your car from an accident with another car or a physical object. Comprehensive covers damage to your car from events other than a collision, such as theft, fire, or vandalism.
What is liability limit amount? ›
What is a limit of liability? A limitation of liability clause is a clause in a contract that provides an overall limit on a business's liability for loss or damage that is caused by that business.
How much is a 1000000 liability policy? ›
On average, a $1 million liability insurance policy costs $69 a month, or $824 a year, for our small business owners. Keep in mind that every business is different, so the $1 million liability insurance cost will vary.
What is the 50/100/50 rule for liability insurance? ›
The 100 means the policy covers a maximum of $100,000 for bodily injury coverage per accident. The last 50 refers to the amount of property damage liability per accident, which would also be $50,000. Remember that bodily injury liability is per person, while property damage liability is per accident.
How much liability insurance do I need for an umbrella? ›
To decide how much umbrella insurance coverage you need, add up the value of your property, savings and investment accounts. Then, take a look at the liability insurance you already have through your existing policies and buy enough umbrella insurance to make up the difference.
What does 100-300/100 mean in car insurance? ›
Buy at least standard 100/300/100 coverage, which translates into $100,000 coverage per person for bodily injury, including death, that you cause to others; $300,000 in BI per accident; and property damage up to $100,000.
Finally, auto liability coverage is limited to auto collisions and only covers damages you cause to another driver or pedestrians in a car accident. General liability covers injuries or death on your business property or those caused by your products and services.
Does Progressive cover me driving someone else's car? ›
Sharing a car insurance policy with a friend could help both of you save money by dividing the costs of some auto insurance coverages. Plus, both of you are covered anytime you drive the other's car. However, your friend's claims or driving history may affect the amount of the car insurance premium.
What does 25/50 coverage mean? ›
So, for example, if you are quoted a 25/50 limit for bodily injury, it means that the insurance policy will cover up to a maximum of $25,000 per person injured in an accident and a total of $50,000 in claims for a single accident.
Is it better to have a $500 deductible or $1000? ›
If you're more likely to get into an accident, you won't want to pay out a higher deductible. However, if you're generally a safer driver, your car insurance premiums will be lower with a $1,000 deductible.
Is it better to have collision or comprehensive? ›
Collision coverage pays for damages to your vehicle that are the result of a collision with another vehicle or a road hazard. Comprehensive coverage pays for other damages to your vehicle such as theft, vandalism, animal damage, falling tree branches and other environmental damage.
What can you do to decrease the cost of insurance policies? ›
Here are some ways to save on car insurance1
- Increase your deductible.
- Check for discounts you qualify for.
- Compare auto insurance quotes.
- Maintain a good driving record.
- Participate in a safe driving program.
- Take a defensive driving course.
- Explore payment options.
- Improve your credit score.
A $1 million general liability insurance policy means your insurance company will provide financial protection for your business up to $1 million in covered losses or damages. Beyond that $1 million limit, you'll have to pay for costs out of pocket without the help of your insurer.
How much is personal liability insurance in the amount of $100000 per occurrence? ›
Personal liability insurance typically costs around $8 to $10 a year for every $100,000 in coverage. Standard home insurance companies usually offer between $100,000 and $500,000 in coverage, though some have personal liability limits as high as $1 million.
How much less is liability vs full coverage? ›
Liability insurance is 67% cheaper than full coverage insurance, on average. The exact cost difference between liability and full coverage car insurance for a given driver depends on several factors, including the driver's insurance company.
What's the difference between having liability coverage and full coverage? ›
Liability coverage is for injuries and damage to others when you're at fault. Full coverage often refers to liability and other state-required coverages plus damage to your car (comprehensive and collision), but it is not an actual insurance coverage.
