Liability Insurance

The Short of It

• Liability car insurance covers damages to another person’s vehicle in an accident you’re found at-fault for.
• Liability-only coverage is much cheaper than full coverage but doesn’t cover your own car. It’s best for older owned vehicles.
• Most states require that you carry a minimum required amount of liability coverage. Each state is different.

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Liability car insurance is required by most states. They each have a different set of requirements, so it’s important that you have the right coverage for where you live.

Even good liability auto insurance only covers damages to other driver’s vehicles and not your own damages. You’ll need full coverage for that, which includes liability but adds comprehensive and collision coverage, as well.

Need cheap car insurance? Make sure you get the best liability car insurance for your needs. Enter your ZIP code above to get FREE car insurance quotes from multiples companies.

What is liability auto insurance?

What is the definition of liability car insurance? Liability simply refers to what you have to pay to another in case you cause an accident to happen. The damage could be to property or person and you could have not intended for the accident to happen, but it did. Liability car insurance covers you but only up to the amount stated on the policy.

This video from Allstate goes over some of what liability car insurance covers.

https://youtu.be/04SZGS6DdVM

For most accidents, especially if they are minor, the majority of the damages are related to property. Obviously, the damages done to any vehicle involved in the collision would be grouped under property damage.

If the cost is higher, you will have to pay for it out if your own pocket. Also, there may be a deductible charge that you must pay the insurance company before they issue out payment. The amount of the deductible, if any, will depend on what you agreed upon when signing the policy.

There is a lot of emphasis put on obtaining the right amount of bodily injury car insurance coverage to protect against costly medical expenses, but property damage can be a hefty total as well.

This is even more apparent for accidents that involve multiple vehicles. That sort of damage can add up quickly which is why auto insurance companies offer property damage liability coverage.

Most states require drivers to purchase a car insurance policy. Each mandated policy usually includes minimums for both property damage and bodily injury coverage, at the least.

Does liability insurance cover my car if someone hits me? No, it doesn’t cover you at all. If you need car insurance to cover your own vehicle— or if you are leasing— you’ll need full coverage. 

Is liability insurance cheaper than full coverage? The main reason people choose liability-only policies versus full coverage is that it is far easier to find cheap liability car insurance coverage. The table below shows average liability insurance vs full coverage for each state.

Car Insurance Rates by State (Liability and Full Coverage)

Read more: Alabama Auto Insurance

What type of coverage is best for car insurance? Though liability is important, your own vehicle isn’t covered by it. It’s best to keep full coverage on a vehicle until it’s older and has depreciated enough to make it not worth it. 

The general rule is to get higher liability coverage if you drive an old model and don’t really have a lot of extra cash to pay for the cost of repairing a new car model owned by someone else.

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What are the minimum liability requirements for your state?

Each state requires that you carry at least a minimum amount of liability coverage. The Insurance Information Institute (III) has compiled the minimum liability requirements for each state.

• California Liability Minimums
  Bodily Injuries – $15,000 for one incident or one person; $30,000 for all persons in one accident
  Property Damage – $5,000 for one accident
• Florida Liability Minimums
  Property Damage Liability: $10,000 Limit
  Personal Injury Protection: $10,000 Limit
• Georgia Liability Minimums
  Georgia law requires drivers to have 25/50/25 liability insurance. That means your policy will pay up to $50,000 for injuries to two or more persons injured in an accident in which you are at fault and up to $25,000 for injuries to one person or damage to property.
• Illinois Liability Minimums
  Bodily injury liability $25,000/$50,000
  Property damage liability: $15,000
  Uninsured/underinsured motorist bodily injury $20,000/$40,000Inidiana Liability Minimums
  25/50/10 policy. This policy will pay up to $25,000 for injuries to one person, up to $50,000 for injuries to two or more people, and up to $10,000 for property damage, as the bare minimum.
• Pennsylvania Liability Minimums
  30/15/5 liability coverage ($15,000 for a single death or injury, $30,000 for death or injury to more than one person, and $5,000 for property damage).
• Kentucky Liability Minimums
  Bodily Injury Liability: $25,000/$50,000 Limit
  Property Damage Liability: $10,000 Limit
• Maryland Liability Minimums
  20/40/15
  $20,000 for one person and up to $40,000 for two or more people in car accidents. Up to $15,000 for damage to your own car. And Maryland requires drivers to carry insurance that pays up to $2,500 in personal injury protection (sometimes abbreviated PIP) to offset doctor bills and hospital costs resulting from a crash.
• New Jersey Liability Minimums
  Bodily Injury Liability: $15,000/$30,000 Limit
  Liability: $5,000 Limit
  Uninsured/Underinsured Motorist Bodily Injury: $15,000/$30,000 Limit
  Uninsured Motorist Property Damage: $5,000 Limit
  Personal Injury Protection: $15,000 Limit
• North Carolina Liability Minimums
  Bodily Injury Liability: $30,000/$60,000 Limit
  Property Damage Liability: $25,000 Limit
  Uninsured Motorist Bodily Injury: $30,000/$60,000 Limit
  Uninsured Motorist Property Damage: $25,000 Limit
• Ohio Liability Minimums
  Bodily Injury Liability: $12,500/$25,000 Limit
  Property Damage Liability: $7,500 Limit
• Oklahoma Liability Minimums
  Bodily Injury Liability: $25,000/$50,000 Limit
  Property Damage Liability: $25,000 Limit
• South Carolina Liability Minimums
  25/50/25. That level of coverage pays up to $25,000 to one driver injured in an accident, up to $50,000 to two more drivers injured in an accident, and $25,000 for property damage you may cause when you are at fault in a South Carolina auto accident.
• Tennessee Liability Minimums
  In Tennessee, you must have at least 25/50/15 coverage. Your policy must pay up to $25,000 for injury to one person, up to $50,000 for injury to two or more people in the same accident, and up to $15,000 for property damage when you are at fault.
• Texas Liability Minimums
  30,000/60,000/25,000
  $30,000 of bodily injury one person one accident
  $60,000 of bodily injury two or more persons in anyone one accident,
  $25,000 of injury to or destruction of property of others in an accident
• Virginia Liability Minimums
  Bodily injury/death of one person $25,000
  Bodily injury/death of two or more persons $50,000
  Property damage $20,000
• West Virginia Liability Minimums
  Bodily Injury Liability: $20,000/$40,000 Limit
  Property Damage Liability: $10,000 Limit
  Uninsured Motorist Bodily Injury: $20,000/$40,000 Limit
  Uninsured Motorist Property Damage: $10,000 Limit
• Wisconsin Liability Minimums
  $10,000 of property damage coverage for the owner of the other vehicle when you are at fault in a crash,
  $25,000 coverage for personal injury or death of a single person in a single accident, and
  $50,000 coverage for personal injury or death of two or more persons in a single accident.

However, there are some states that have other options.

What states do not require liability insurance?

There are 3 states that differ from the rest as far as basic auto insurance coverage is concerned. These are New Hampshire, Mississippi, and Virginia. In New Hampshire, the state gives the vehicle owner personal responsibility and choice regarding car insurance.

TheVirginia Department of Motor Vehicles notes that you can pay a $500 Uninsured Motor Vehicle (UMV) fee that does not provide any coverage but does allow you to drive your vehicle while uninsured at your own risk.

The New Hampshire Department of Motor Vehicles the state gives the vehicle owner the personal responsibility and choice regarding car insurance.

You can get it and the amount of coverage would also be up to you but you will have to pay for damages you cause to other people which include injuries, property damage, and medical care. This is part of your responsibility as a driver-at-fault.

In Mississippi, you have a choice of posting cash or bond with the local authorities instead of buying insurance. It’s a similar procedure to paying insurance except the bond or cash is paid upfront instead of in monthly payments. Also, it affords residents of Mississippi the option not to do business with insurance companies, if that is what they want.

In Virginia, vehicle owners have the choice to buy insurance with the local DMV or place a Surety Bond with the same office. If they would rather not do this, they will be required to get minimum insurance of 25,000 bodily insurance for one person/50,000 bodily insurance 2 or more persons/20,000 property damage from any local insurance company.

What is the cheapest car insurance for liability?

The major insurers like State Farm, USAA, and Geico car insurance companies offer good rates for most people and are some of the best liability car insurance companies for college students. You can also research best liability car insurance reviews on Reddit. But your particular rates are based upon a lot of individual factors.

Your driving record is the biggest factor that goes into these rates. Accidents, speeding tickets, and DUIs have a huge impact on how much you’ll pay, raising your rates more than double in some cases.

Your credit history is also a big one. Someone with poor credit will pay much more for the same policy than their neighbor with a good Experian credit score.

Commute length can increase your rates. If you find yourself driving 50 miles a day, you’ll likely end up paying much more than if you worked close to your house.

Though you may not think it, your location is also a big one. Your ZIP code and city change how much you pay. Sometimes, you can move to another end of the same city and pay double what you did at your old place. That’s because theft and fraud

What is the best liability car insurance for me?

Liability protects you from damages to another person from an accident you may have caused. Many drivers seek out this type of coverage as its the most basic coverage required to operate a vehicle in most states.

Some of the best liability auto insurance will pay for, or reimburse, for the parts and labor involved with repair or replacement of a vehicle. In at-fault states, the driver who causes the accident will be responsible for paying for all of the damages. In a no-fault state, the insured will have to worry only about their own damaged property. (For more information, read our “New Car Replacement“).

Read more: Are no-fault states better for auto insurance?

Property damage covers more than just damage to the vehicles involved in a collision. Its capabilities include replacing or repairing personal belongings that were inside a vehicle at the time of a crash. Property damage will also cover anything that needs to be repaired or replaced because it was struck by a vehicle.

Of course, since it is liability coverage it will only cover the damages you cause to another driver if you are determined to be at fault. If you want additional protection for yourself you will need to look into adding full coverage and add collision to your policy.

As for injuries or damages you sustained personally, liability insurance does not cover this. This includes personal property like your car and injuries that led to medical treatment. Also, liability is a mandated cover for most states. The liability coverage amount would depend on the car, model, year, driver’s history, credit score, and whether the car is on loan or fully paid, among other factors.

The best liability policy would be the top amount an insurance company is willing to go with. It will most likely cover all situations where you as the driver cause an accident that injures other people or damages property.

The bump on this type of coverage is that the premium would be very high especially if you live in an area where accidents happen regularly and/or your car is a brand new top-of-the-line model.

Another way to look at what would be the top liability car insurance coverage would be to imagine not having to shell out anything out-of-pocket including a high deductible. Obviously, state liability minimums are not the best policies because they barely scratch the surface in most road accidents. Medical treatment alone is astronomical and increasing every year.

In addition, the best liability insurance for you may not apply for another person. This is because you may be a lousy driver compared to someone else and so your driving history demands that you get higher coverage for property damage liability than PIP or uninsured motorist coverage.

In a nutshell, the best liability car insurance would be one that fits your needs and driving habits to a tee.

It’s important to check into insurance companies that you are interested in as well. Ratings such as J.D. Power and A.M. Best show the company’s financial strength and customer service ratings. You can check their track record and see if it works for you.

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Frequently Asked Questions: Liability Insurance

We’ve added some more FAQs below regarding liability car insurance. Read on if you have any lingering questions about the best liability car insurance for you.

#1 – How much liability car insurance coverage should I have?

The idea is to have enough coverage to keep from having to pay out of pocket for repairs. Property damage repairs may cost as little as $100 or up to tens of thousands of dollars, depending on the value of the property in question and the cost to repair/replace it. (For more information, read our “Dollar-a-Day Insurance“).

Each state sets its own laws, minimum requirements and limits for liability coverage. Some states require as little as $10,000 in property damage and other states require a higher minimum. Regardless of the required amount, it is almost always a good idea to buy more than is necessary. Property damage costs can add up quickly.

The more coverage you can buy, the better. A good rule to follow is having $50,000 in coverage per vehicle. It is not unheard of to purchase $100,000 in coverage. In an accident with expensive damages, the courts can go after your personal assets if you owe more than your car insurance will pay for.

#2 – Do I have to have property damage liability car insurance coverage?

Legally, that is completely up to the state where the car is registered or drove. The majority of the states have legal minimum requirements for property damage coverage that must be met in order to register a vehicle.

Even in states that do not require car insurance coverage, there are laws that force drivers to prove financial responsibility. This means that the owners of registered vehicles in that state must be able to prove, on-demand, that they have the monetary means to pay for property damages as necessary.

Everyone needs this type of coverage to protect them while driving. It only takes a moment for an accident to happen. That moment can cost a person thousands of dollars. Not having the means to pay for those damages is not only irresponsible but often illegal. Purchasing liability coverage is the right path for any driver.

#3 – How does property damage liability car insurance work in an accident?

Your insurance company will first assess the damages in the accident. The company will pay out up to the limit of coverage you have purchased. For example, if your policy has a $10,000 property damage liability limit then the auto insurance company will pay out up to $10,000 in qualified damages per accident.

If your damages are over $10,000 you will have to pay the remainder of the expenses out of pocket. It does not matter how individuals or vehicles are involved in the collision, you will only receive up to your specified limit.

This is why many car insurance companies recommend purchasing more than the required minimum as damages can add up quickly. If you are uncertain how much liability coverage to purchase, talk to your insurance company or compare car insurance online. They will have a good idea of what damages cost in your area and how much coverage should be enough to cover your needs.

#4 – How often do car insurance companies deny liability claims?

Most people would tell you that insurance companies would deny as many claims as possible but it’s simply not true. There is a process they follow; the results of which must be explained and justified with real evidence, not gut feeling. Thus any claim that is denied goes “through the wringer” so to speak.

Each auto insurance company has its own figure on denied claims and if they should happen to have too many of these, they could go under scrutiny and review by the state’s insurance department.

However, to understand why a claim is denied, here is a list of the basic factors in an insurance company’s claims assessment:

• No pay case — the case of where fault should be levied on is unquestionable and not caused by the policyholder
• Comparative Negligence — This breaks down who is at fault by percentages and if the injured person is more than 50% at fault, the claim is denied
• Comparative Negligence Part 2 — If the person claiming is partially at fault, the insurance company can pay part of the claim only or reduce the amount by 20, 25, 0r 30 percent.
• Shared Responsibility — This refers to the justification that both parties claim from their insurance companies if they are both at fault.

Auto insurance companies have to keep a certain loss ratio as well or it’s easy to tell that they aren’t paying out enough in claims.

Read more: Do you have to prove No Claims Discount on your car insurance?

#5 – Why should I have liability car insurance?

First of all, liability insurance is mandated in almost all states. If you rear-end another car, the costs is on your hands. Instead of going through legal remedies to have the car repaired, the other car owner can safely rely on getting at least a portion of the cost from your insurance company. Plus, you could be the “the other guy with the damaged rear.”

In addition, it helps you cover the cost instead of having to shell out-of-pocket a large amount which you may not have to begin with. Then there is the other possible cost of a more serious road accident that may require medical treatment by the passengers of the other car which, if you are at fault, you must pay for.

Even if you don’t have enough on your insurance policy, the other party has the option of filing a legal case against you for expenses incurred. In most cases though, lawyers will work for a settlement rather than a drawn-out court case.

Either way, you end up with unexpected expenses that could have been covered with a well-thought-out car insurance liability plan. Keep in mind that medical costs are continuously on an upward trend especially in the last few years.

#6 – What do certificates of liability insurance cover?

Just as a diploma is proof that you graduated from a certain school, the certificate of liability is your proof that you are insured. It is a document that contains the basic details of your insurance policy such as name insurance company, name of insured, listed persons under the policy, the date it became effective, expiration date, and policy number.

You may be asked to present this when you are involved in a road accident as proof that you can cover the costs should you be found to be at fault. The no-fault driver may want to list down the details on the certificate of liability or even request a copy for whatever purpose he may need it for.

This certificate is what can be kept in your car instead of the bulky policy document. Since it is an important document, you might want to have a photocopy made for your files.

The certificate of liability is also required as proof of coverage for loans or if you plan on selling your vehicle. Of course, the coverage is not transferred to the buyer’s name but the buyer would probably want to know if the car’s insurance is active and maybe even other details regarding claims that have been made on the car.

#7 – When should you reduce car insurance to liability only?

Ideally, car insurance should not be reduced to liability coverage only but we don’t live in an ideal world and many are struggling with poor finances. Thus, the cases when you feel you can live comfortably with liability coverage only are:

• when you have the funds to cover unexpected car and medical expenses
• when you drive less often than you commute
• when you have fully paid off your auto loan
• when you are insuring a second car that you do not plan to use daily
• when you’re planning to sell the car within the next 12 months
• when your car is in excellent running condition, well-maintained and your driver’s record is impeccable

Instead of cutting back on liability insurance for a car you use daily, consider other budget cuts like extended warranties, credit card insurance, or cutting out some insurance coverage that you may not need. This means that it is not a case of full coverage or minimum coverage.

You can customize your insurance policy so it fits your budget and insurance needs. There is a middle ground that you can work with. You just need to find an insurance company or agent willing to sit down and work out the perfect policy for you.

#8 – Will my liability car insurance cover rental cars?

Your personal liability insurance may cover rental cars but it’s not a given. Every insurance company has its own policy regarding this so you will have to check your policy or call your provider.

Also, you have to check the rental car contract because they too have their individual quirks. For instance, they don’t even use the same terms in their contracts so it can be confusing if you plan on renting cars periodically.

That being said you should go ahead and look for specifics on physical damage coverage on non-owned cars in your car insurance policy. This would cover rental cars as long as the clause does not limit coverage to private, non-owned cars.

Also, this would apply if you have physical damage coverage. If it is just liability, then any physical damage to the rental car would not be covered by your policy.

Non-owned vehicles may also not include motorcycles, trucks, jet skis, U-haul, or other similar types of vehicles. For clarification on these, you will need to contact your insurance broker.

In addition, there are some states that give coverage for rentals under the liability policy but it would generally be very limited. Getting insurance from the rental company would allow you to have a higher cash value and could cover the physical damage costs adequately.

#9 – If your car is paid off should you just have liability auto insurance?

Yes, at the very least because it is required by law in almost all states although this is not always the best action to take with insurance. You need to ask yourself a few questions on personal finance such as:

• Can I afford to buy a new/used car if my current car gets totaled?
• Can I afford to pay for out of pocket repairs?
• Do I have enough funds to cover me for when the car is being repaired?

Also, you need to find out if your state will allow just liability coverage. Keep in mind that driving a car on public roads is a social responsibility. Any accident you cause will put others at risk and in an unexpected situation.

You will not be able to just walk away with an apology, no matter how sincere that may be. Aside from expenses incurred by both parties, there is also the penalties, fines, and after-effects of the accident like an increased premium.

In many states, liability is just one of the required coverage for car insurance. There are 5 other types although PIP and bodily injury are the types most likely to be required aside from liability.

#10 – Is there a deductible for liability auto insurance?

No, there is no deductible amount in most cases for the basic state-mandated auto liability insurance. If you happen to live in a state that does not require minimum liability insurance, then you can skip this altogether.

However, if you add coverage to go beyond the basic minimum, the insurance company will charge you a deductible accordingly. The rate of the deductible will depend on the insurance company, the added coverage limit, and your personal decision.

You can decide to pay higher or lower and this decision will affect your monthly premium. The higher the deductible, the lower your monthly payments will be, and vice versa. It’s a choice that must be made based on your finances and the amount you can afford to pay monthly.

If you do decide to upgrade from basic minimum liability coverage, there are 7 types of liability insurance and if you get comprehensive or collision coverage which would mean getting all types of liability coverage, then you will have to pay a deductible.

The deductible amount can range from $250 to $1,000 or more but the average is pegged at $500. The 7 types of liability insurance under full coverage are bodily injury liability, medical, PIP, property damage liability, comprehensive, collision, underinsured, and uninsured motorist coverage.

#11 – State Liability Car Insurance — How does it work?

Auto liability insurance is the only insurance that is legally demanded of every car owner in all but 2 states. There is no standard limit or base figure for all states so you will need to contact any one insurance company in your area about the minimum requirements.

It is also possible to look up the website of the state’s insurance department which oversees all insurance companies in the state.

This coverage is required when you register a vehicle with the DMV. Without a current insurance policy for the vehicle, you will not be allowed to drive the vehicle. If you do, it will result in penalties, fines, a suspended driver’s license, and even cause your vehicle to be impounded. The only way you can get your vehicle back is if you comply with the state’s criteria which include the insurance.

Once you have your liability insurance, make sure you have the certificate of liability. This document should be kept in the car as proof that your car is covered by insurance.

It will be demanded from you if ever you get pulled over or you figure in a road accident. Finally, this insurance is renewable annually and you have the option of increasing coverage.

#12 – Can a person get liability auto insurance on a car they don’t own?

This is known as the “Frequent Borrower” listing which happens when a person borrows a car to use on a regular basis. The car owner can then list this person under his car insurance so he is covered by the policy.

This is very common among couples and families but it has its downside such as a higher premium if the listed person does not have a good driving history.

In cases where a borrower buys liability insurance on a car he does not own or is not assigned to him as an office car, there is the chance that the insurance company may reject any claims made. When applying for car insurance, the basic assumption is that the applicant is the owner of the vehicle unless stated otherwise.

If you are not the owner and you do not inform the insurance company, your application may be considered fraudulent containing false information. It will lead to the cancellation of the policy and non-approval of any claims you may file with them.

It is critical that you inform the insurance company if you are not the owner of the vehicle. They have their own protocol to follow for cases like these which is not standard with every insurance company.

#13 – Why would liability auto insurance be higher for Ford Explorer than an F150 pickup?

Car insurance is computed based on how much it would cost the insurance company to repair or replace the vehicle. In short, the estimated value of the car for the next 12 months is important and the higher this estimate is, the higher the premium charged to you will be.

The price of the new Ford Explorer is about $29,150 while the price of the Ford F-150 is approximately $23, 500 which means there is a big $5,000+ difference. This is the main reason why the Ford Explorer comes with a higher premium.

In addition, the parts of the Explorer may cost more and the labor cost could be higher since it is a more expensive vehicle. Then, one has to consider the fact that a Ford Explorer may be more likely to be stolen than a Ford pick-up truck even if the pick-up truck is brand new and a Ford F-150.

One could also consider that in the past year, Ford Motors has been performing exceptionally well not just in Northern America but also in Asia. The demand for Ford vehicles globally is increasing which means it is managing to retain a high value even for older models. While this is great news for Ford, it is expected to be met with trepidation by insurance companies.

#14 – Can I be sued if I carry liability auto insurance?

Liability insurance protects you if you damage another person’s property in your car or driving. Part of the protection includes legal defense. Your insurance company should provide you with a lawyer whose fees the company will shoulder in case there is a lawsuit filed against you in relation to a car accident. (For more information, read our “Car Accident Insurance“).

The usual case for being sued even with liability auto insurance is when your limit is low and the expenses of the other party are much higher.

Should you lose the case and want to appeal the decision, the insurance company is no longer obliged to pay for legal representation. In most cases though, the lawyers will try to come to a settlement arrangement even before the case gets to court.

Also covered by the insurance company in the first instance of the legal battle are the court fees. This is one of the reasons why most experts in insurance would not recommend getting the basic minimum liability coverage.

Even with legal assistance from the insurance company, there are other aspects to consider such as time and income loss and the high probability that your premium will be increased by the insurance company not to mention a note on your driving history.

Make sure you have at least the minimum required liability car insurance for your needs. Enter your ZIP code to get FREE quotes from multiple insurers.