What Is Liability Car Insurance?
Liability car insurance is a type of insurance that covers the cost of the other driver's injuries and property damage if you're at fault in an accident. Liability car insurance consists of both bodily injury liability and property damage liability insurance.
Bodily injury insurance pays for the victim’s lost wages and medical bills. Property damage insurance covers repair costs for their vehicle or stationary objects, like their home or fence, that may have been damaged in the accident.
Check out WalletHub's analysis of 17 major insurance companies to find the cheapest liability insurance available in your state.
Table of Contents
What Does Liability Car Insurance Cover?How Does Liability Car Insurance Work?How Much Does Liability Car Insurance Cost?Liability Car Insurance Coverage Requirements4 Things to Consider When Purchasing Liability Car InsuranceVideo: Liability Car Insurance BasicsAsk the ExpertsLiability Car Insurance FAQ
What Does Liability Car Insurance Cover?
Liability car insurance covers medical expenses and property damage costs other people incurred as a result of an accident you've been deemed responsible for causing. Your own liability auto insurance will never cover your own expenses.
| Type of Expense | Covered | Not Covered |
|---|---|---|
| Medical Expenses | Other peoples’ medical costs after accidents the policyholder is at-fault for | The policyholder’s medical expenses resulting from an at-fault accident |
| Property Damage | Damage to other peoples’ property, including cars, houses, or fences | Damage to the policyholder’s vehicle |
Liability insurance also covers legal fees if the policyholder is sued after causing an accident.
Learn more about what liability insurance covers.
How Does Liability Car Insurance Work?
If you’re at fault for an accident, the other driver will file a claim with your liability insurance policy to have their bodily injury and property expenses paid for. Liability insurance also covers your legal fees if you are sued because of an incident.
How much the insurance company will pay in the event of an accident is determined by your policy limits. For example, if you choose a $25,000 limit for bodily injury liability coverage, then your insurer will only pay up to $25,000 for medical expenses and you will have to pay anything above that amount.
Liability Car Insurance Limits
- Bodily injury liability limit per person. The maximum amount your insurance company will pay for medical expenses and lost wages for each individual injured in an accident you cause.
- Bodily injury liability limit per accident. The overall maximum amount your insurance company will pay for medical expenses and lost wages for everyone injured in an accident you cause.
- Property damage liability limit. The maximum amount your insurance company will pay to repair others’ property, such as their cars or their homes, that you damage in an accident.
Liability limits can be abbreviated as numbers separated by slash marks. For example, 50/100/50 means $50,000 in bodily injury liability insurance per person, $100,000 in bodily injury liability insurance per accident, and $50,000 in property damage liability insurance per accident. Liability insurance policies are often described as either a combined single-limit policy or a split-limit policy.
Learn more about how liability car insurance works.
How Much Does Liability Car Insurance Cost?
Liability insurance costs an average of $1,407 per year, though the exact cost depends on your state and the amount of coverage that you buy. Your premium will go up as you raise your liability limits, but higher levels of coverage are only marginally more expensive than the state minimum. As a result, it’s usually best to purchase as much liability insurance as you can afford in order to maximize your protection.
Learn more about how much liability car insurance costs.
Liability Car Insurance Coverage Requirements
Liability Car Insurance Coverage Requirements by State
| State | Min Bodily Injury Per Person | Min Bodily Injury Per Accident | Min Property Damage Per Accident |
|---|---|---|---|
| Alabama | $25,000 | $50,000 | $25,000 |
| Alaska | $50,000 | $100,000 | $25,000 |
| Arizona | $25,000 | $50,000 | $15,000 |
| Arkansas | $25,000 | $50,000 | $25,000 |
| California | $15,000 | $30,000 | $5,000 |
| Colorado | $25,000 | $50,000 | $15,000 |
| Connecticut | $25,000 | $50,000 | $25,000 |
| Delaware | $25,000 | $50,000 | $10,000 |
| Florida | NA | NA | $10,000 |
| Georgia | $25,000 | $50,000 | $25,000 |
| Hawaii | $20,000 | $40,000 | $10,000 |
| Idaho | $25,000 | $50,000 | $15,000 |
| Illinois | $25,000 | $50,000 | $20,000 |
| Indiana | $25,000 | $50,000 | $25,000 |
| Iowa | $20,000 | $40,000 | $15,000 |
| Kansas | $25,000 | $50,000 | $25,000 |
| Kentucky | $25,000 | $50,000 | $25,000 |
| Louisiana | $15,000 | $30,000 | $25,000 |
| Maine | $50,000 | $100,000 | $25,000 |
| Maryland | $30,000 | $60,000 | $15,000 |
| Massachusetts | $20,000 | $40,000 | $5,000 |
| Michigan | $50,000 | $100,000 | $10,000 |
| Minnesota | $30,000 | $60,000 | $10,000 |
| Mississippi | $25,000 | $50,000 | $25,000 |
| Missouri | $25,000 | $50,000 | $25,000 |
| Montana | $25,000 | $50,000 | $20,000 |
| Nebraska | $25,000 | $50,000 | $25,000 |
| Nevada | $25,000 | $50,000 | $20,000 |
| New Hampshire* | $25,000 | $50,000 | $25,000 |
| New Jersey | NA | NA | $5,000 |
| New Mexico | $25,000 | $50,000 | $10,000 |
| New York | $25,000 | $50,000 | $10,000 |
| North Carolina | $30,000 | $60,000 | $25,000 |
| North Dakota | $25,000 | $50,000 | $25,000 |
| Ohio | $25,000 | $50,000 | $25,000 |
| Oklahoma | $25,000 | $50,000 | $25,000 |
| Oregon | $25,000 | $50,000 | $20,000 |
| Pennsylvania | $15,000 | $30,000 | $5,000 |
| Rhode Island | $25,000 | $50,000 | $25,000 |
| South Carolina | $25,000 | $50,000 | $25,000 |
| South Dakota | $25,000 | $50,000 | $25,000 |
| Tennessee | $25,000 | $50,000 | $25,000 |
| Texas | $30,000 | $60,000 | $25,000 |
| Utah | $25,000 | $65,000 | $15,000 |
| Vermont | $25,000 | $50,000 | $10,000 |
| Virginia** | $30,000 | $60,000 | $20,000 |
| Washington | $25,000 | $50,000 | $10,000 |
| West Virginia | $25,000 | $50,000 | $25,000 |
| Wisconsin | $25,000 | $50,000 | $10,000 |
| Wyoming | $25,000 | $50,000 | $20,000 |
* New Hampshire drivers are allowed to forego insurance entirely.
**Virginia drivers have the option to pay a $500 annual uninsured motor vehicle fee in lieu of obtaining liability insurance.
Learn more about how much liability car insurance you need.
4 Things to Consider When Purchasing Liability Car Insurance
1. States have different liability requirements
Most states require a certain amount of bodily injury and property damage liability insurance. Some states also require drivers to have additional coverage types like uninsured motorist, personal injury protection, or MedPay.
You need at least the minimum coverage required by your state, and it is recommended that you purchase as much coverage as you can comfortably afford.
2. The more assets you have, the more coverage you need
The more assets you own, the more auto liability insurance you may need. If you own a home or have significant savings, for instance, an accident could seriously affect your finances should the other driver decide to sue.
To illustrate this, if you’re at-fault in an accident which causes $135,000 in property damage, but your policy only covers $35,000, the other driver can sue you for the remaining $100,000. If the lawsuit is successful, they may use any and all of your assets to collect on that payment.
3. You may need additional types of insurance
Liability coverage is not the only type of car insurance you should consider. To be fully protected in an accident, you should have collision coverage to protect your vehicle repair costs and personal injury protection insurance to cover your medical expenses.
You should also consider comprehensive insurance, so your car is protected in the event of something besides an accident, like a tree falling or vandalism.
4. There are special state programs for high-risk drivers
Many states have special programs for drivers who cannot obtain insurance through the private market because they are considered too high-risk to cover. Since insurance provided through these programs is very expensive, you should only use this option as a last resort.
Video: Liability Car Insurance Basics
Ask the Experts
To gain more insight about liability insurance, WalletHub posed the following questions to a panel of experts. Click on the experts below to view their bios and answers.
1. Should drivers purchase more liability insurance than is required by law?
2. What should drivers consider when determining their liability coverage levels?
3. When should drivers purchase only the minimum liability insurance required by their state?
Ask the Experts
Constance A. Anastopoulo
Visiting Professor of Law, UCLA Law School; Professor of Law, Charleston School of Law
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Ian Alam
Ph.D., Distinguished Professor of Marketing, School of Business, State University of New York at Geneseo
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Henry H. Perritt
Professor of Law Emeritus, Director of the Graduate Program in Financial Services Law Emeritus, Kent College of Law, Illinois Institute of Technology Chicago
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Francisco J. Quevedo
BA, MBA, CAGSB, DPS, Assistant Professor of Professional Practice, Marketing Department, Rutgers Business School, The State University of New Jersey
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Matthew Glennon
Senior Lecturer, Isenberg School of Management, University of Massachusetts Amherst
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Allen Seward
Ph.D., Director, Baylor Business Fellows, Hankamer School of Business, Baylor University
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More Experts
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