March 17, 2025
Auto Insurance
What Is Liability Auto Insurance and What Does It Cover?
If you have a car, there’s no alternative to understanding liability car insurance coverage. It protects you from financial losses if you’re at fault in an accident. If you hit someone else's car on the road, it may cause property damage, severe bodily injury, or both. In such a case, the other driver may also sue you depending on the severity of the damage, which will add up to legal expenses. But who will pay for these expenses? The answer is auto liability insurance. So, what does auto liability insurance cover and what does it leave out? Any guesses?
In this article, we’ll discuss what liability insurance covers, its coverage limit, state requirements, costs, and how to choose the right liability insurance coverage. Let’s start with the basics!
What Is Liability Car Insurance Coverage?
Liability auto insurance is a must-have for every driver. In fact, 49 out of 50 states mandate minimum liability insurance coverage. Unless you live in New Hampshire, you have to carry proof of insurance, which is the minimum auto liability coverage required by your state.
In case you crash into another vehicle for which you’re responsible, your liability insurance will help cover the costs for bodily injury and property damage suffered by others.
Real-Life Example:
Greg, a new driver, rear-ends another vehicle at a red light. His auto insurance covers the damages to the other car and medical bills for the injured driver. However, Greg must pay for his own repairs.
Although there are various types of car insurance coverage, a liability insurance policy is one that ensures that no one suffers financially if an accident occurs. Without auto liability coverage, you could face a costly lawsuit.
Interested in learning more? Read when did auto insurance become mandatory.
What Does Liability Insurance Cover?
Liability insurance is designed to protect you from financial losses when you’re legally at fault for an accident. It covers expenses related to injuries, property damage, and even legal costs if the injured party files a lawsuit.
If an insured driver causes an accident, their insurance company comes forward and pays for the damages up to the policy’s liability coverage limits. Liability coverage is divided into two essential parts:
- Bodily Injury Liability (BI)
- Property Damage Liability (PD)
Bodily Injury Liability (BI Coverage)
If an insured driver causes an accident that physically injures another driver, bodily injury liability pays for medical costs and other expenses. This coverage is crucial for everyone driving on the road because medical bills are extremely high in the USA. Besides, the bills could skyrocket, if multiple people are injured.
Here's what bodily injury liability covers:
- Medical expenses include Hospital bills, surgeries, doctor visits, and rehabilitation.
- Lost wages which include compensation for an injured person’s time away from work.
- Pain and suffering that covers emotional and physical distress resulting from the injury.
- Legal fees that pay for a lawyer if the injured party sues the insured.
- In tragic cases, it covers burial or funeral expenses.
Real-Life Example:
A driver named Jesse is driving to work when he accidentally runs a red light and hits a pedestrian. The pedestrian suffers a broken leg and a concussion. Jesse’s bodily injury liability coverage pays for the pedestrian’s hospital bills, physical therapy, and lost wages during recovery. Jesse would have to pay thousands of dollars out of pocket if he didn’t have car liability insurance.
Property Damage Liability (PD Coverage)
Property damage liability pays for the repair or replacement of another person’s property if the insured driver causes damage in an accident. It doesn’t only apply to vehicles. It also includes buildings, fences, street signs, and more.
Here’s what property damage liability covers:
- Vehicle repairs. It pays for damages to another driver’s car.
- Property repairs. It covers damage to houses, fences, light poles, and mailboxes.
- Loss of use. It reimburses for rental vehicles while a damaged car is being repaired.
- Legal costs which pay for a lawyer if the property owner sues.
Real-Life Example:
On a cold winter morning, Sarah was driving her car along a winding road covered in a thin layer of ice. She suddenly loses control of his vehicle and crashes into a parked car and a storefront. In such a case, his property damage liability coverage steps in and pays for repairs to both the vehicle and the shop’s damaged window.
Our opinion on liability auto insurance: In the case of not having liability car insurance, you risk both yourself and others' safety on the road. Besides, the legal and financial consequences of driving without minimum insurance could be serious since it’s legally required by your state.
What Does Liability Insurance Not Cover?
Liability insurance is mandatory for every driver but that doesn’t mean it covers all sorts of risks or unexpected events. It clearly has some limitations. As has been said, it only covers injuries, and property damages you cause in an accident. Unfortunately, it doesn’t cover your own expenses, vehicle repairs, or certain legal claims. However, if the other driver is at fault, then their liability insurance will cover your vehicle and injuries (if any).
Here's what car liability insurance does not cover:
- Your medical bills aren’t covered. You will need health insurance or personal injury protection (PIP) for your own medical cost. States like Michigan mandatorily require PIP which is included in liability insurance.
- It doesn’t cover the cost of your vehicle repairs. Only collision insurance or comprehensive coverage can cover your car’s damage.
- No intentional acts are covered. If you cause an accident on purpose, your insurance company won’t pay.
- If damages occur from natural disasters like floods, storms, and fires, you’ll not be covered unless you have comprehensive insurance.
- Theft or vandalism isn’t covered either. For stolen vehicles, you’ll need comprehensive coverage.
What Is the Coverage Limit for Liability Car Insurance?
A liability car insurance policy has set coverage limits. It indicates the maximum amount an insurance company will pay if an accident happens. You might have seen coverage limits many times before. These limits are usually represented by three numbers, such as 50/100/50. Each number corresponds to a different part of the liability coverage. According to this limit:
- Bodily Injury Liability Per Person is $50,000.
- Bodily Injury Liability Per Accident is $100,000.
- Property Damage Liability Per Accident is $50,000.
If the total cost resulting from the accident surpasses these limits, you’ll need to pay the remaining balance out of pocket. That’s why many drivers choose higher coverage limits.
Minimum Liability Insurance Requirements: State-by-State
Each state sets its own minimum liability coverage limit which you must purchase to legally drive. Apart from bodily injury and property damage, some states may even require personal injury protection. For example, Michigan's auto insurance requirement includes $250,000 in personal injury protection along with BI and PD.
See the following table to find out the state-specific minimum liability auto insurance requirement:
State | Bodily Injury Liability (Per Person) | Bodily Injury Liability (Per Accident) | Property Damage Liability | Additional Coverage |
Alabama | $25,000 | $50,000 | $25,000 | - |
Alaska | $50,000 | $100,000 | $25,000 | (Optional for certain remote residents) |
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 | $25,000 uninsured motorist per person, $50,000 uninsured motorist per accident |
Delaware | $25,000 | $50,000 | $10,000 | $15,000 personal injury protection per person, $30,000 per accident |
Florida | - | - | $10,000 | $10,000 personal injury protection |
Georgia | $25,000 | $50,000 | $25,000 | - |
Hawaii | $20,000 | $40,000 | $10,000 | $10,000 personal injury protection |
Idaho | $25,000 | $50,000 | $15,000 | - |
Illinois | $25,000 | $50,000 | $20,000 | $25,000 uninsured motorist per person, $50,000 per accident |
Indiana | $25,000 | $50,000 | $25,000 | - |
Iowa | $20,000 | $40,000 | $15,000 | - |
Kansas | $25,000 | $50,000 | $25,000 | Uninsured motorist, personal injury protection |
Kentucky | $25,000 | $50,000 | $25,000 | Option for single limit of $60,000 |
Louisiana | $15,000 | $30,000 | $25,000 | - |
Maine | $50,000 | $100,000 | $25,000 | $50,000 uninsured motorist per person, medical payments coverage |
Maryland | $30,000 | $60,000 | $15,000 | Uninsured motorist coverage |
Massachusetts | $20,000 | $40,000 | $5,000 | Uninsured motorist coverage, $8,000 personal injury protection |
Michigan | $50,000 | $100,000 | $10,000 | $1 million property protection, $250,000 personal injury protection |
Minnesota | $30,000 | $60,000 | $10,000 | Uninsured motorist, $40,000 personal injury protection |
Mississippi | $25,000 | $50,000 | $25,000 | - |
Missouri | $25,000 | $50,000 | $25,000 | Uninsured motorist coverage |
Montana | $25,000 | $50,000 | $20,000 | - |
Nebraska | $25,000 | $50,000 | $25,000 | Uninsured motorist coverage |
Nevada | $25,000 | $50,000 | $20,000 | - |
New Hampshire | $25,000 | $50,000 | $25,000 | Uninsured motorist, medical payments coverage |
New Jersey | - | - | $5,000 | $15,000 personal injury protection |
New Mexico | $25,000 | $50,000 | $10,000 | - |
New York | $25,000 | $50,000 | $10,000 | Uninsured motorist, $50,000 personal injury protection |
North Carolina | $30,000 | $60,000 | $25,000 | Uninsured motorist coverage |
North Dakota | $25,000 | $50,000 | $25,000 | Personal injury protection |
Ohio | $25,000 | $50,000 | $25,000 | - |
Oklahoma | $25,000 | $50,000 | $25,000 | - |
Oregon | $25,000 | $50,000 | $20,000 | Uninsured motorist, $15,000 personal injury protection |
Pennsylvania | $15,000 | $30,000 | $5,000 | - |
Rhode Island | $25,000 | $50,000 | $25,000 | - |
South Carolina | $25,000 | $50,000 | $25,000 | Uninsured motorist coverage |
South Dakota | $25,000 | $50,000 | $25,000 | Uninsured motorist coverage |
Tennessee | $25,000 | $50,000 | $25,000 | - |
Texas | $30,000 | $60,000 | $25,000 | - |
Utah | $25,000 | $65,000 | $15,000 | $3,000 personal injury protection |
Vermont | $25,000 | $50,000 | $10,000 | Uninsured motorist coverage |
Virginia | $50,000 | $100,000 | $25,000 | Uninsured motorist coverage |
Washington | $25,000 | $50,000 | $10,000 | - |
Washington, D.C. | $25,000 | $50,000 | $10,000 | Uninsured motorist coverage |
West Virginia | $25,000 | $50,000 | $25,000 | Uninsured motorist coverage |
Wisconsin | $25,000 | $50,000 | $10,000 | Uninsured motorist coverage |
Wyoming | $25,000 | $50,000 | $20,000 | - |
How Much Does Auto Liability Insurance Cost?
Just like the coverage limit, the cost of minimum car liability insurance can vary. On average, it is cheaper than full coverage insurance since it only covers BI and PD for others. Rates can differ depending on your state, insurer, driving record, and coverage limit.
The national average for minimum liability coverage car insurance costs 69 per month or $828 per year. However, if you choose a higher coverage limit, the rate may increase. Also, if you’re young, drive an expensive vehicle, and have a history of traffic violations, you’ll face some of the highest rates for liability insurance.
Check out how much is car insurance. Compare rates to get a cheaper liability car insurance quote. Also, if you need affordable full coverage auto insurance that includes reliable liability auto coverage, don’t hesitate to contact L.A. Insurance. If you want to talk to someone about your insurance needs, find an agent here.
How Much Liability Insurance Do I Need?
The amount of liability insurance you need depends on your assets, risk level, and state requirements. At a minimum, you must meet your state’s liability insurance limits. We recommend choosing higher liability coverage limits to protect against costly lawsuits and damages.
A good of rule thumb is to match your liability coverage to your net worth. Many drivers go for 100/300/50 or higher to cover bodily injury, property damage, and unexpected legal fees. If your assets exceed these limits, you can consider an umbrella insurance policy for extra protection. Besides, if your vehicle is financed, the lender might have additional insurance requirements for it. You can learn about it by reading Can you get liability insurance on a financed car?
What Is Auto Liability Coverage: The Bottom Line
Liability insurance for cars is very crucial for protecting your finances if you cause an accident. It covers both bodily injury and property damage for others. Although minimum coverage is required in most states, choosing higher coverage limits offers better protection against financial risks. At this point, if you’re looking for an affordable insurance agency for liability auto insurance, call us at (800) 893-9393 and talk to our insurance sales and support team.
FAQs on Liability Car Insurance Coverage
What does general liability cover?
General liability insurance also known as commercial general liability (CGL), covers you and your company for bodily injury, property damage, and legal fees if you're responsible for an accident. It also helps pay for medical expenses, damages, and potential lawsuits. However, it doesn't cover your own injuries or vehicle repairs.
What is the minimum amount of liability insurance coverage required?
Each state sets different minimum liability insurance requirements. However, most states require 25/50/25 which means $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $25,000 for property damage per accident. Check your state’s laws or your insurer to know the exact limit. This article has already covered the state-by-state minimum coverage limit for liability insurance.
What does business liability insurance cover?
Business liability insurance covers third-party injuries, property damage, legal liability, and advertising-related claims. Also, it protects your business from lawsuits, medical bills, and legal expenses due to negligence.
Do I need to have liability insurance on a financed car?
You need liability insurance for a financed car. Your lender usually requires both comprehensive and collision insurance along with liability to safeguard their investment. Since the lender has a financial interest in your car, they can even impose force-placed insurance for you if you drop any of this coverage.
What is the difference between liability insurance and full coverage insurance?
Liability insurance covers others' injuries and property damage if you're at fault. Full coverage includes collision and comprehensive insurance, covering your own vehicle repairs and damages from theft, weather, or vandalism.
What is the difference between personal and business liability insurance?
Personal liability insurance protects individuals from injury or property damage claims. Business liability insurance covers businesses against legal liability, negligence claims, and work-related accidents.
What does commercial general liability insurance cover?
Commercial general liability insurance is a must-have for businesses. It protects against claims for bodily injury, property damage, and advertising injury. Plus, it covers legal liability, helping protect your business assets from expensive lawsuits.
What does employer liability insurance cover?
Employer liability insurance covers employee-related injuries, lawsuits, and medical expenses that workers' compensation doesn’t cover. It protects employers from workplace-related negligence claims.
What does cyber liability insurance cover?
Cyber liability insurance protects businesses from data breaches, cyber-attacks, and legal liability costs. Typically, it covers notification expenses, legal fees, and financial losses due to cyber threats.
What does liability insurance cover if you are not at fault?
If you’re not at fault, your liability insurance won’t apply. In such a case, the at-fault driver’s insurance company should cover bodily injury and property damage. If they’re uninsured, your uninsured motorist coverage may help.
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Auto insurance
Comercial Auto
How Much Is Gap Insurance?
GAP Insurance (Guaranteed Asset Protection) covers the difference between what your standard car insurance pays and what you still owe on your loan if your vehicle is stolen or totaled in an accident. This optional add-on insurance coverage is crucial for financed or leased vehicles. So, of course, if you don’t have it in the event of theft or total loss, you might have to pay thousands of dollars out of pocket to settle your car loan. But how much does GAP coverage actually cost?
What Is Gap Insurance?
So, what is gap insurance coverage? When you buy a car with a loan, the value of it drops quickly over time. And unfortunately, if an accident totals it, standard auto insurance covers only its actual cash value (ACV). But what if you owe more? That’s where gap coverage helps. For example, you owe $30,000, but your full coverage auto insurance pays you $26,000 after depreciation. Gap insurance covers the $4,000 difference.
When Does Gap Insurance Not Pay?
Gap insurance (short for Guaranteed Asset Protection Insurance) helps cover the difference between what you owe on a car loan and the vehicle’s actual cash value if it’s totaled or stolen. However, many drivers have numerous questions about this policy, one of the most common being the circumstances under which gap insurance does not pay or provide coverage. It doesn’t pay for partial damage, a lapsed policy, or if you have missed payments. It also won’t cover negative equity from a previous loan, fraud, intentional damage, or damages caused by activities like ride-sharing.
What Is Liability Auto Insurance and What Does It Cover?
If you have a car, there’s no alternative to understanding liability car insurance coverage. It protects you from financial losses if you’re at fault in an accident. If you hit someone else's car on the road, it may cause property damage, severe bodily injury, or both. In such a case, the other driver may also sue you depending on the severity of the damage, which will add up to legal expenses. But who will pay for these expenses? The answer is auto liability insurance. So, what does auto liability insurance cover and what does it leave out? Any guesses?
Can You Cancel Gap Insurance?
Sometimes canceling GAP insurance is crucial for those with auto loans or leases. GAP insurance covers the difference between your car’s value and the amount owed on a loan or lease after a total loss. If you've recently purchased a car with financing, you may have already purchased GAP insurance. However, if you've paid off your loan early or plan to sell your car, you might be wondering: Can I cancel GAP insurance and get a refund? In this article, we'll explore what GAP insurance is, how to cancel it, and request refunds.
Can You Get Liability Insurance on a Financed Car?
Financing a car comes with responsibilities and one of the biggest is getting the right kind of insurance coverage. A common question that might cross your mind while looking to insure your financed or leased vehicle is, “Can you get liability insurance on a financed car?”
