What Is Liability Car Insurance?

Most states require you to have liability car insurance. But how does it protect you? Read more to learn about liability coverage.
Drivers exchanging liability insurance information after accident

Imagine driving to work and rear-ending a car. It’s a daily occurrence across America, making up 28% of all car crashes. A single car accident, even a minor one, can lead to expensive medical bills or repair costs. That’s why almost every state requires liability car insurance.

The liability insurance coverage pays for car damages and injuries to other drivers following an accident. In this article, you’ll learn what this coverage is and how it works. We’ll tell you:

  • What it covers
  • What it doesn’t cover
  • How much it costs
  • How much you need
  • Frequently asked questions

What Is Liability Car Insurance Coverage?

If you cause an accident, you’ll have to pay for damages or injuries to you and any other parties involved. Liability coverage protects you from paying out of pocket when you’re at fault.

Most states require some form of liability coverage to drive. But the limits are set low. In many cases, state minimum coverage is insufficient for bad accidents. It’s up to you how much risk you expose your finances to. Note that this coverage doesn’t pay for any damages to your vehicle. It only covers repair costs for cars you damage in a crash. Collision coverage is what pays to fix your vehicle.

When your policy includes liability, collision, and comprehensive insurance, you have what’s known as full coverage. Liability is required anyway, but it’s the most important of the three primary auto insurance types full coverage includes.

What Liability Car Insurance Covers

First, it’s very important to understand what liability car insurance doesn’t cover. Knowing this will prevent any issues when you file a claim with your insurer.

Liability doesn’t cover any physical injury or damage to your car. It only covers the other parties involved. Coverages like collision and personal injury protection (PIP) cover your own injuries or damages. However, states don’t require these types.

Liability has two parts. The first covers property damage that you cause. And the second covers any bodily injuries that the other party suffers. Here’s a quick breakdown of each part of the coverage:

Property Damage Liability

Property damage liability or PDL covers any property damage you cause. It only covers up to the limit that the liable driver purchases. Remember, your state will require you to have a certain amount (unless they don’t require any insurance). But the minimum amount may not be enough to cover the full extent of the damages. Types of property damage include:

  • Another driver’s car
  • Buildings or structures
  • Streetlights or lampposts
  • Damages to any other property because of an accident
  • Any court costs in the event of a lawsuit for damages.

Bodily Injury Liability

Bodily injury liability or BIL covers any injuries or medical bills that the other passengers have. The amount that it covers will only be up to the limits on the liable driver’s policy. Below are what BIL covers:

  • Any medical costs and potentially lost income of affected person (could be the other driver, a pedestrian, or possibly a passenger in your own car).
  • Long-term medical care required by the other party
  • Funeral costs and pain and suffering if a death occurs because of the accident.
  • Covers your own legal fees if the other party affected happens to file a lawsuit against you.

Most States Require Liability Insurance

Every state besides New Hampshire and Virginia requires some form of car insurance. Even in states that don’t require any, you’re still accountable for any damages you cause. Each state that requires coverage sets minimum limits. This means that you’ll need to have a set amount of liability protection depending on your state.

How to Read Insurance Coverage Limits

Three common coverage limits relate to liability:

  • Property damage limit. Max amount that the insurer will pay for damages.
  • Bodily injury limit per person. Max amount your insurer will cover for a person’s injuries.
  • Bodily injury limit per accident. Limit for the total amount the insurer pays for injuries.

The required limits for liability coverage are on a per-person basis for BIL. PDL limits are up to a total dollar amount of damages. For example, according to its Department of Motor Vehicles, California requires drivers to have:

  • $15,000 for injury or death to a person
  • $30,000 for injury or death to two or more people
  • $5,000 for any damage to property

Often, you’ll see insurers present limits as –/–/–. For the state of California example, it would look something like 15/30/5. Each number represents an amount in thousands of dollars worth of coverage.

Reasons for Requiring Liability Insurance

States require auto insurance for good reason. Without liability protection, you and the other party would have to pay for damages yourself. Proper coverage protects each party from financial ruin. If you can’t pay for damages after an accident, the other party may sue you for your assets, such as:

  • Savings accounts
  • Houses or real estate
  • Future paychecks and income

Besides covering car crash expenses, driving without insurance can land you in jail. You may also have to pay fines. It can cost you in a lot of ways. Carrying coverage will protect you and the other party from any disaster. That way you can both move on with your lives after the accident.

How Much Liability Car Insurance Should You Buy?

Most states require at least some amount of liability insurance. But that may not be enough. Often, the total cost of medical bills and damages will mount after an accident. Drivers may need to pay medical bills for months or even years in the wake of an accident. The general idea is to buy as much as you can afford. That way you’ll have as much protection as possible from having to use your own assets to pay for an accident.

49 states require liability insurance. The District of Columbia and Puerto Rico also require basic liability. There’s no way around it. You’ll need to buy this coverage before you can drive if you live in a state that requires it.

Note: Virginia requires liability coverage unless drivers register as an uninsured driver. If you do this, you must pay a fee.

You’d have to pay out of pocket if your coverage doesn’t cover the total cost of damages. The state could revoke their license if the driver doesn’t pay the damages.

Max Out Your Liability Coverage Limits

It’s wise to try and max out your coverage as much as possible because you can risk racking up large costs. Doing so would help you to avoid paying any money out of pocket after an accident.

Minimum limits usually don’t cover the total cost of an accident. Normally, limits are the bare minimum amount of car insurance you must have. You may also need other types of coverage to fit your needs. Be sure to speak with your agent about what types you should have on your policy.

Umbrella Insurance

Most insurers sell umbrella policies, but what are they? Umbrella insurance covers the same situations as liability. The difference is that umbrella policies add extra coverage to what liability already offers.

Umbrella covers any extra costs that liability policies can’t. They protect the liable driver from needing to pay out of pocket for leftover costs. For instance, in some cases, legal fees will exceed the coverage of liability.

Umbrella policies are great for protecting you from huge expenses. As an example, crashing into an exotic car would cost you thousands to repair. The expenses could go over your liability limits. Luckily, an umbrella policy would go beyond your limits and cover you.

Cost of Liability Auto Insurance

Everybody pays a different amount for their insurance. Insurers use a variety of factors to help determine your rates. These factors are little details about you that can tell a company if you’re a risk for filing claims. These factors include:

One insurer might charge you less than another. It’s always a good idea to compare insurance quotes before you settle on a company. That’s the only way to know you’re getting the best rate.

US Average Liability Insurance Rates By State

The table below displays national average liability rates ranging from 2012 to 2019. It’s the most recently available set of car insurance pricing data from the Insurance Information Institute (III).

YearUS Average
2012$503.88
2013$518.49
2014$530.51
2015$538.73
2016$566.51
2017$611.12
2018$644.11
2019$650.35
Note: cost totals are for one year of liability coverage. All data is from the III.

Below is a visual representation of the above data:

Average US Liability Insurance Rates 2012 to 2019

Average Liability Insurance Rates by State

While several details go into how much liability coverage costs, where you live is one of the most prominent. Insurers often vary rates depending on the number of claims, medical expenses, how well people drive, and the population in certain areas. On average, this means that if you live in a riskier state, you’ll pay more for protection.

The following table shows average liability insurance rates in all 50 states and Washington, D.C. in 2019. The costs you see come from the III, and were originally collected by the National Association of Insurance Commissioners (NAIC). The national average we compared each state to was $650.35 in 2019.

StateAverage CostUS AVG Difference
Alabama$527.20-23.3%
Alaska$584.90-11.2%
Arizona$662.55+1.8%
Arkansas$484.37-34.3%
California$627.77-3.6%
Colorado$704.82+7.7%
Connecticut$799.45+18.6%
District of Columbia$819.36+20.6%
Delaware$897.87+27.6%
Florida$997.20+34.8%
Georgia$829.86+21.6%
Hawaii$478.83-35.8%
Idaho$433.66-49.9%
Illinois$521.11-24.8%
Indiana$444.98-46.1%
Iowa$350.31-85.6%
Kansas$426.14-52.6%
Kentucky$609.98-6.6%
Louisiana$1023.91+36.5%
Maine$375.40-73.2%
Maryland$749.18+13.2%
Massachusetts$664.92+2.2%
Michigan$979.47+33.6%
Minnesota$502.32-29.5%
Mississippi$544.43-19.4%
Missouri$527.59-23.3%
Montana$437.69-46.6%
Nebraska$431.71-50.6%
Nevada$925.71+29.7%
New Hampshire$442.52-46.9%
New Jersey$958.31+32.1%
New Mexico$584.25-11.3%
New York$932.46+30.2%
North Carolina$392.06-65.9%
North Dakota$312.30-108.2%
Ohio$447.86-45.2%
Oklahoma$504.79-28.8%
Oregon$684.81+5%
Pennsylvania$548.58-18.5%
Rhode Island$918.30+29.2%
South Carolina$715.26+9.1%
South Dakota$337.11-92.9%
Tennessee$479.43-35.6%
Texas$650.17-.02%
Utah$615.15-5.7%
Vermont$374.06-73.8%
Virginia$491.51-32.3%
Washington$705.11+7.7%
West Virginia$515.20-26.2%
Wisconsin$421.21-54.4%
Wyoming$356.08-82.6%
Note: cost totals are for one year of liability coverage. All data is from the III.

Frequently Asked Questions

Q: What if I live in a no-fault state?

A: In a no-fault state, an insurer will pay for the injuries of the other party up to a certain point. You may have to cover the leftover expenses if the costs exceed your limits.

Liability coverage is useful in no-fault states because it will cover the extra expenses without you having to pay out of pocket.

Q: What will happen to my rates after an accident?

A: After any accident that you’re involved in, your rates may increase. The best way to avoid a high premium is to drive as safely as possible and avoid traffic violations. If you still feel that your rates are high, be sure to look for discounts that apply to you or find an insurer that’ll give you a better deal.

Q: Is an umbrella policy the same as liability car insurance?

A: Not exactly. An umbrella policy adds an extra amount of liability protection. Excess liability is another name for umbrella. This is because it covers any excess damages that need to be paid.

Umbrella also pays for damages unrelated to your car. An example would be someone slipping and falling in your home and needing extensive care. Liability, on the other hand, will only pay for damages related to a car crash.

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