Compare Auto Rates from Top Rated Carriers
What is Liability Car Insurance?
Have you ever wondered why liability insurance exists or what it is meant for? Well, you have come across the perfect article! In this article, you will find out every little detail you need to learn about this vital component of car insurance.
The Definition and Basics of Liability Car Insurance
Liability insurance exists to provide compensation to other motorists who suffer injuries in an accident that is your fault. Liability insurance is also called third-party insurance. If anything seems confusing, don't worry. I will touch on all aspects of liability insurance you need to know about in this article.
Let's begin by answering a few essential questions.
- What sort of damages and injuries does liability insurance cover?
- How much liability auto insurance coverage should you have in case of accidents?
- How much does liability coverage cost?
There are two critical components to liability coverage and these both cover personal injury and property damage. The amount of coverage you will have to meet will depend on your state laws and your personal preferences. Car insurance regulations operate differently from state to state. Each state will have its minimum insurance policy limits that motorists will have to adhere to.
| 50/ | 100/ | 50/ |
|---|---|---|
| $50,000 in bodily injury coverage per person | $100,000 in bodily injury coverage per incident | $50,000 in property damage per incident |
This means $50,000 –– bodily injury coverage for each person / $100,000 in bodily injury coverage for the incident and $50,000 in property damage for the accident.
Bodily Injury Liability Coverage
Bodily injury coverage is to cover the costs of others pain, suffering, and injuries. If there are wages lost due to the accident and medical expenses, this coverage will also cover these costs. If you have been found at-fault in a car accident, bodily injury liability will allow you to cover expenses such as:
- Medical costs caused by injuries related to the accident
- Wages lost or reduced incomes caused by accident
- Emotional, physical pain, and suffering resulting from injuries
Property Damage Liability Insurance
Property damage coverage will help cover some of the damages caused to another person's property as well as loss-of-use costs that are related to the accident. Property damage coverage will help cover expenses such as:
- Vehicle damage and repairs
- Debris removed as a result of an incident (trees, signage, etc.)
- Repair of damaged structures
Types of Liability Insurance
Most of the major car insurance providers in the US will offer a variety of options for liability insurance. Some of these may include:
- Commercial Auto Insurance: If a vehicle is being used for business it is recommended to obtain a commercial auto liability insurance policy. This coverage will protect your business against claim(s) that occur from an auto accident.
A commercial liability insurance policy provides special insurance coverage for trucks and other vehicles. Commercial liability insurance is important to have if an employee gets into an accident with another vehicle.
- Business Owners Policy (BOP): A BOP is similar to commercial liability insurance but comes with some additional coverage and property protections.
This type of insurance can help offset some of the risks. For example, it can help damages to business building, equipment, and inventory expenses caused by an interruption to business and any injuries that take place on your commercial location. If you were to have your site destroyed by a hurricane, you could get help from your BOP insurance in offsetting the costs of damages.
- Professional Liability Insurance / Errors and Omissions Insurance: This insurance covers costs that come from lawsuits and other professional errors. Professional liability insurance can include coverage for negligence lawsuits or from providing bad professional advice.
What is Not Covered by Liability Insurance?
- Collision Coverage: If you are driving a valuable vehicle that is worth more than $4,000 you may want to include this coverage on your policy to protect your vehicle if you drive into an object. For example, a wall or vehicle.
- Comprehensive Coverage: Comprehensive coverage usually comes paired with your collision coverage and protects your vehicle from every kind of damage that is not covered by collision insurance. Comprehensive coverage can include damage caused by vandals or thieves as well as stolen vehicles.
- Uninsured/Underinsured Motorist Coverage: You will need this coverage if the driver of the vehicle at fault is not carrying sufficient coverage to cover your damages and injuries or is not carrying sufficient coverage. Just like liability coverage, this can be separated into parts of bodily injury and another section for property damage.
- Personal Injury Protection (PIP): This is insurance add on that can help cover the costs of medical expenses and work-loss coverage after the accident. If a health insurance policy does not cover you, you may want to consider this vital add on.
How Much Liability Insurance Do You Need?
Each state has its own mandatory rules for liability insurance minimums and we have listed out some of these figures for you later on in the article.
It is important to know what the minimum liability coverage is for the state you are driving in. Even though you may save a few bucks initially by sticking to the minimum, there are a few reasons why you will want to increase your coverage:
Some states have low minimum liability limits. In California the minimum coverage is only $5,000. If the property damage you cause exceeds that amount, you will be responsible for the difference. For example, if damages cost $7,000 your insurance carrier will only take care of $5,000 and you will be responsible for the remaining balance.
If a driver were to wreck a 2019 Ford F-150 valued at $28,000 the driver at fault will be facing a charge of over $23,000. This can be a difficult situation if you are a homeowner or business owner.
As a rule of thumb, you should keep your coverage at 100/300/100, if possible.
How much does liability car insurance cost?
There are a variety of factors that go into the cost of liability coverage. According to the US, average coverage for a standard motor vehicle, the price difference between a minimum coverage and full coverage is around $180 each year.
| State Minimum | 50/100 Limits | 100/300 Limits |
|---|---|---|
| $581 | $672 | $761 |
Liability insurance alone can account for roughly half your premium, especially if you also carry collision and comprehensive coverage. Then there will be less of a difference between the limits of common liability.
Minimum liability limits per state
| State | Bodily Injury: Per Person | Bodily Injury: Per Accident | Property Damage |
|---|---|---|---|
| Alabama | $25,000 | $50,000 | $25,000 |
| Alaska | $50,000 | $100,000 | $25,000 |
| Arizona | $15,000 | $30,000 | $10,000 |
| Arkansas | $25,000 | $50,000 | $25,000 |
| California | $15,000 | $30,000 | $5,000 |
| Colorado | $25,000 | $50,000 | $15,000 |
| Connecticut | $20,000 | $40,000 | $10,000 |
| Delaware | $15,000 | $30,000 | $10,000 |
| Florida | — | — | $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 | $10,000 |
| 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 | $20,000 | $40,000 | $10,000 |
| Minnesota | $30,000 | $60,000 | $10,000 |
| Mississippi | $25,000 | $50,000 | $25,000 |
| Missouri | $25,000 | $50,000 | $10,000 |
| Montana | $25,000 | $50,000 | $10,000 |
| Nebraska | $25,000 | $50,000 | $25,000 |
| Nevada | $15,000 | $30,000 | $10,000 |
| New Hampshire | $25,000 | $50,000 | $25,000 |
| New Jersey | $15,000 | $30,000 | $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 | $15,000 |
| Texas | $30,000 | $60,000 | $25,000 |
| Utah | $25,000 | $65,000 | $15,000 |
| Vermont | $25,000 | $50,000 | $10,000 |
| Virginia | $25,000 | $50,000 | $20,000 |
| Washington | $25,000 | $50,000 | $10,000 |
| Washington DC | $25,000 | $50,000 | $10,000 |
| West Virginia | $20,000 | $40,000 | $10,000 |
| Wisconsin | $25,000 | $50,000 | $10,000 |
| Wyoming | $25,000 | $50,000 | $20,000 |
Recent Questions
What is Collision Insurance?
Collision insurance will cover your damages in the event of a collision. There are some reasons you will or will not want this in your policy. It is crucial to fully understand what you will be getting from your policy before you sign anything. Here are some critical questions to consider.
How much will my insurance pay if my vehicle is a total loss?
Your insurance company will only pay the vehicle’s cash value (AVC). For example, if your vehicle is not paid off and you owe $12,000. The actual cash value for your vehicle is $10,000 . You will be responsible for the difference unless you have GAP insurance which is offered at the dealership when purchasing the vehicle.
Do I need to have valid liability car insurance if I am in an accident?
The coverage each policy provides for unlisted drivers will be different from policy to policy and you will need to check with your insurance carrier.
Will I have to get another policy for my motorhome if I already have the state required liability insurance on my car insurance policy?
Yes. You will need to get a new policy to cover your motor home but the good news is that you might be able to bundle your policies and qualify for a multi policy discount!
Sandra Cruz | Linkedin
Based in Newport Beach, CA, Sandra has been a licensed insurance agent in California and Texas for 5 years and is an editor and writer specializing in all types of insurance matters. Sandra is Insurance Online's authority on auto, home, and business insurance and has been featured in publications such as Forbes, Yahoo! Finance, and US World News Report.
Start Saving Now
Buy Online
Our easy-to-use tool lets you compare quotes from top providers, all at once and online.
OR
Connect with an Agent
Whether you just prefer a friendly voice or need more information, our licensed agents are ready to help you save.
(800) 956-8611