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“Liability” is just another word for responsibility. So, if you’re ever found at-fault after an accident, whether you crash into another car, hit a pedestrian or plow down your neighbor's picturesque picket fence, you’re legally responsible (or liable) to pay for the damages you cause. With liability car insurance, your insurer foots the bill on your behalf.
But auto liability insurance coverage is not always cut and dried, and figuring out how much you need can be a challenge. Here’s a closer look at:
What liability car insurance covers (and what it doesn’t).
What you need to know about “limits.”
How much auto liability insurance you need.
How much liability coverage costs.
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What does liability car insurance cover?
Liability car insurance covers other people’s expenses when you cause an accident. It has two main components:
Bodily injury liability coverage. This pays other people’s costs when they’re injured in a traffic-related accident you cause. It covers things like medical bills, pain and suffering, lost wages and even funeral costs.
Property damage liability coverage. This pays others’ costs when their property is damaged in a traffic-related accident you cause. This can range from cars and fences to buildings and government infrastructure, like guardrails and road signs. It may even pay for other people’s personal belongings and a rental car for the other driver.
Beyond other people’s injuries and property damage, liability car insurance can also cover your own lawyers’ bills or court fees if you’re sued after an accident.
» MORE: What does car insurance cover?
What liability car insurance doesn't cover
Auto liability insurance won’t pay for your or your family’s medical bills or repairs to your car — it’s only designed to pay others for the damage you cause behind the wheel.
To cover your own bills, you’ll need to rely on other types of insurance, such as personal injury protection or health insurance for your medical expenses and collision insurance for repairs to your vehicle.
🤓Nerdy Tip
If you want more protection, consider buying full coverage car insurance. Full coverage insurance isn't a specific type of policy, but refers to a combination of coverage types, including liability insurance and comprehensive and collision coverage.
» MORE: Liability insurance definition
Liability car insurance limits
Car liability insurance pays only up to the maximum amounts, or “limits,” specified in your policy. If damage from an accident exceeds those limits, you'll be responsible for paying for the rest.
Most auto policies have three main liability limits, which are often displayed as three numbers on your policy. For example, you may see something like “25/50/25” on your car insurance declaration page. Here’s how to interpret that:
Bodily injury liability limit per person. The first number is the maximum your insurance will pay for injuries to a single person after an accident. (In the example above, “25” stands for $25,000.)
Bodily injury liability limit per accident. The second number is the maximum for injuries to everyone you hurt in the accident — except for you or anyone in your household. The per-accident maximum comes into play if multiple people are injured in an accident. (This is the “50” above, meaning $50,000.)
Property damage liability limit per accident. The final number represents the maximum amount your insurance company will pay for total property damage you cause. That includes damage to cars, buildings or anything else that isn’t a person. (“25” above means $25,000.)
What if all I see is a single number?
Instead of having three separate limits, some insurers offer an alternative called “combined single limit” liability. Combined single limit liability is one larger liability limit to cover both bodily injury and property damage. In many cases, the flexibility of this type of liability insurance means more financial protection than split limit coverage.
Combined single limit liability coverage generally costs more than paying for three separate limits.
» MORE: Compare car insurance
How much liability car insurance you need
Nearly every state requires at least some liability coverage (or proof you have enough cash on the side to pay for damages yourself). The only exceptions are rural parts of Alaska without requirements and Virginia, where residents can waive liability coverage if they pay the state $500 annually. Here’s a list of all state minimum car insurance requirements.
While many states have low liability limit requirements, you may want a higher limit to protect your savings and other financial assets if you cause an accident. Medical bills and car repairs can be incredibly expensive, and if you’re found at-fault you’ll be responsible for the balance. A split second could be the difference between a normal day and the beginning of bankruptcy.
For example, say you hit another car, total it and seriously injure four people. If you’re at fault, you’ll be responsible for the value of the car, medical bills of all four passengers and any damage to the roadway. Now, you’re looking at paying almost $500,000 in medical bills and another $50,000 for the car and damaged roadway. Do you have enough liability auto insurance to pay for those costs?
If you don’t have enough coverage — that is, if your bodily injury and property damage limits aren’t that high, respectively — you can be held personally responsible for any excess. The people you injured can sue you for that money, and you could end up losing your home or, in some states, having your wages withheld. The more you have to lose, the more they can come after.
🤓Nerdy Tip
As a general rule, you’ll want enough liability insurance to cover your net worth. That’s equal to the value of all the cash and investments you have and the things you own, minus your debt. If you don’t have much stuff, there’s less incentive to sue you, and you may not need any additional coverage. Maybe you’ll decide the extra money in your pocket is worth more than peace of mind from extra coverage.
» MORE: How much car insurance do you really need?
Need more auto liability insurance? Grab an umbrella
Your car insurance company might not allow liability limits high enough to cover all your assets — many auto insurers have a maximum bodily injury limit of $500,000 or lower.
If you think you’ll need more liability coverage than your auto insurer will provide, consider umbrella insurance. Umbrella policies expand auto and home liability insurance beyond your carrier’s normal limits.
In general, umbrella policies cover those who have a lot of assets or more opportunities to encounter risk. You might have the sort of risk an umbrella policy is meant to cover if you:
Host lots of parties.
Have a swimming pool, trampoline or other feature that could be considered an “attractive nuisance.”
Own one or more dogs. Depending on the breed of your dog, your insurer may not cover your animal.
Own boats, RVs, multiple homes or rental properties.
How much does car liability insurance cost?
The national average car insurance cost of minimum car insurance, which typically includes liability auto insurance and other state-mandated coverage, is $549 per year, according to NerdWallet’s January 2024 rate analysis. This rate goes up to $817 per year, on average, if you have an at-fault accident on your record. For drivers who have a recent DWI or DUI, minimum coverage costs $1,045, on average.
Car insurance rates vary widely by state and are also influenced by things like your age, your personal driving history, the make and model of car and, in some states, your credit score.
» MORE: How much does liability-only car insurance cost?
See what you could save on car insurance
Easily compare personalized rates to see how much switching car insurance could save you.
Frequently asked questions
What does liability car insurance cover?
Auto liability insurance pays for damage you cause others when you’re at fault for a car accident. This could include injuries to other drivers and passengers and damage to other vehicles or civic property. However, liability car insurance doesn’t pay for your own expenses, such as medical treatment or vehicle repairs.
Does auto liability insurance cover my car if someone hits me?
If someone else is to blame for an accident that damages your car, their liability insurance would typically pay for your repairs. However, if they don’t have insurance, your repairs could be covered by your collision coverage or uninsured motorist coverage if your policy includes these coverage types.
Do you need liability car insurance?
In a word, yes: Every state except Virginia and rural parts of Alaska requires all drivers to have liability auto insurance. Virginia waives the liability requirement if you pay the state $500 annually, and Alaska exempts residents who live in remote areas. Each state sets its own minimum car insurance requirements and many require additional types of insurance.
How much liability car insurance do I need?
It depends. At a minimum, you’ll need to buy at least as much insurance as your state mandates — but the higher your net worth, the more liability coverage you may want to have to shield your assets from potential lawsuits. If you’re financing or leasing your car, your lender may also require comprehensive and collision insurance.
Is there a deductible for liability car insurance?
No. Neither you nor anyone involved in a car accident should have to pay a deductible for a liability insurance claim. Car insurance deductibles are most commonly associated with other coverage types, such as comprehensive, collision, uninsured motorist and underinsured motorist coverage.
