Liability insurance protects innocent victims of auto accidents. If you are at fault for an accident, liability pays for the damage to their car, medical bills related to injuries incurred from the auto accident, and any lost wages. Liability coverage is required in all states except New Hampshire and Virginia.
- What Does Liability Insurance Cover?
- Bodily Injury vs. Property Damage Liability Coverage
- Understanding Liability Coverage Limits
- What Liability Insurance Does Not Cover
- Liability-Only Versus Full Coverage
- When Does Liability Insurance Pay?
- Do You Have Enough Liability Coverage?
- FAQs
Quick Answer: What Does Liability Insurance Cover?
Liability insurance covers damage and injuries you cause to other people or vehicles. It does not cover your vehicle or your injuries.
What Liability Covers:
- Damage to someone else's property or vehicle
- Other people's injuries and corresponding medical bills or lost wages
- Legal fees if you're sued
What Liability Doesn't Cover:
- Damage to your vehicle
- Your medical bills
- Theft of your vehicle
- Weather damage
- Vandalism
Why It's Required:
- It protects those not at fault for accidents
- It ensures drivers can pay for the damage they cause
Bodily Injury vs. Property Damage Liability Coverage
Liability insurance covers two types of liability: bodily injury liability and property damage liability. Understanding what this covers provides peace of mind for policyholders.
| Bodily Injury Liability | Property Damage Liability |
|---|---|
|
Medical expenses for others involved, including: • Emergency room visits • Hospital stays • Surgery and treatment • Physical therapy • Prescription medications • Medical equipment • Ongoing care |
Damage to other vehicles • Repair costs • Total loss value if the person's car is totaled • Rental car while the other person's car is being repaired |
|
Lost wages for others, such as: • The income they miss due to injuries • Future lost earning capacity if permanently disabled |
Damage to buildings and structures • Storefronts • Houses • Fences • Mailboxes • Utility poles • Public property like traffic signals, road signs, guardrails, and street lights |
|
Pain and suffering • Compensation for physical pain • Emotional distress • Loss of quality of life |
Damage to personal property in the other vehicle • A laptop in their car • Phone • Other belongings damaged |
|
Funeral and death benefits • If someone dies from injuries you caused • Burial/funeral expenses • Loss of income to the surviving family |
Legal defense • Your legal fees if you're sued • Attorney fees • Court costs • Settlements or judgments (up to your limits) |
Understanding Liability Coverage Limits
When you're looking at liability limits, you'll often see three numbers together, such as 25/50/25. These numbers refer to the maximum amount paid out in thousands of dollars:
- The first number ($25,000) represents the maximum amount your liability insurance will pay out per person for bodily injury.
- The second number ($50,000) determines the maximum coverage per accident for all bodily injuries combined.
- The third number determines the maximum amount per accident that insurance will pay for property damage.
The second number is higher because it limits the absolute maximum amount the insurance company will pay out for all people combined. No single person can get more than the per-person limit; however, if multiple people are involved, that middle number restricts the total payout combined.
Minimum Requirements
All states except New Hampshire and Virginia require at least some amount of liability coverage, and each state has different minimum coverage limits. These are only the minimum amounts, and most insurers offer multiple tiers of insurance coverage above the minimum requirements. Higher limits are associated with higher premium costs, but they're typically only $10-30 more each month than the tier below it. Getting an insurance quote can help you compare insurance costs associated with different limits.
| State | Required Insurance | Minimum Liability Limits |
|---|---|---|
| Alabama | Bodily injury and property damage liability | 25/50/25 |
| Alaska | Bodily injury and property damage liability | 50/100/25 |
| Arizona | Bodily injury and property damage liability | 25/50/15 |
| Arkansas | Bodily injury and property damage liability | 25/50/25 |
| California | Bodily injury and property damage liability | 30/60/15 |
| Colorado | Bodily injury and property damage liability | 25/50/15 |
| Connecticut | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/25, $25,000 uninsured/underinsured per person, and $50,000 uninsured/underinsured per accident |
| Delaware | Bodily injury and property damage liability, PIP | 25/50/10, $15,000 PIP per person, and $30,000 PIP per accident |
| Florida | Property damage liability, PIP | $10,000 property damage liability per accident and $10,000 PIP coverage |
| Georgia | Bodily injury and property damage liability | 25/50/25 |
| Hawaii | Bodily injury and property damage liability | 20/40/10 and $10,000 PIP |
| Idaho | Bodily injury and property damage liability | 25/50/15 |
| Illinois | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/20, $25,000 uninsured/underinsured per person, and $50,000 uninsured/underinsured per accident |
| Indiana | Bodily injury and property damage liability | 25/50/25 |
| Iowa | Bodily injury and property damage liability | 20/40/15 |
| Kansas | Bodily injury and property damage liability, uninsured/underinsured motorist, PIP | 25/50/25, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, $4,500 for medical expenses, $900 per month for lost wages, $25 per day for substitution benefits, $2,000 for funeral expenses, $4,500 for rehabilitation expenses, $900 per month for survivor benefits, and $25 per day up to one year substitution benefits |
| Kentucky | Bodily injury and property damage liability, PIP | 25/50/25 and $10,000 PIP |
| Louisiana | Bodily injury and property damage liability | 15/30/25 |
| Maine | Bodily injury and property damage liability, uninsured/underinsured motorist, PIP | 50/100/25, $50,000 uninsured/underinsured per person, $100,000 uninsured/underinsured per accident, and $2,000 in medical payments |
| Maryland | Bodily injury and property damage liability, uninsured/underinsured motorist | 30/60/15, $30,000 uninsured/underinsured per person, $60,000 uninsured/underinsured per accident, and $15,000 uninsured property |
| Massachusetts | Bodily injury and property damage liability, uninsured/underinsured motorist, PIP | 25/50/30, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, and $8,000 PIP |
| Michigan | Bodily injury and property damage liability, PIP | 50/100/10, $1 million property protection, $250,000 PIP* lower PIP amounts available for some Medicare and Medicaid recipients |
| Minnesota | Bodily injury and property damage liability, uninsured/underinsured motorist, PIP | 30/60/10, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, and $40,000 PIP |
| Mississippi | Bodily injury and property damage liability | 25/50/25 |
| Missouri | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/25, $25,000 uninsured/underinsured per person, and $50,000 uninsured/underinsured per accident |
| Montana | Bodily injury and property damage liability | 25/50/20 |
| Nebraska | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/25, $25,000 uninsured/underinsured per person, and $50,000 uninsured/underinsured per accident |
| Nevada | Bodily injury and property damage liability | 25/50/20 |
| New Hampshire | Financial responsibility only | 25/50/25, $1,000 medical, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, $25,000 uninsured/underinsured property, if you opt for insurance |
| New Jersey | Property damage liability, PIP | $5,000 property damage liability and $15,000 PIP |
| New Mexico | Bodily injury and property damage liability | 25/50/10 |
| New York | Bodily injury and property damage liability, uninsured/underinsured motorist, PIP | 25/50/10, $50,000 wrongful death coverage per person, $100,000 wrongful death coverage per accident, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, and $50,000 PIP |
| North Carolina | Bodily injury and property damage liability, uninsured/underinsured motorist | 50/100/50, $50,000 uninsured/underinsured per person, $100,000 uninsured/underinsured per accident, and $50,000 uninsured/underinsured property |
| North Dakota | Bodily injury and property damage liability, uninsured/underinsured motorist, PIP | 25/50/25, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, and $30,000 PIP |
| Ohio | Bodily injury and property damage liability | 25/50/25 |
| Oklahoma | Bodily injury and property damage liability | 25/50/25 |
| Oregon | Bodily injury and property damage liability, uninsured/underinsured motorist, PIP | 25/50/20, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, and $15,000 PIP |
| Pennsylvania | Bodily injury and property damage liability, PIP | 15/30/5, $5,000 medical payments |
| Rhode Island | Bodily injury and property damage liability | 25/50/25 |
| South Carolina | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/25, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, and $25,000 uninsured/underinsured property |
| South Dakota | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/25, $25,000 uninsured/underinsured per person, and $50,000 uninsured/underinsured per accident |
| Tennessee | Bodily injury and property damage liability | 25/50/25 |
| Texas | Bodily injury and property damage liability | 30/60/25 |
| Utah | Bodily injury and property damage liability, PIP | 30/65/25, $3,000 PIP |
| Vermont | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/10, $50,000 uninsured/underinsured per person, $100,000 uninsured/underinsured per accident, and $50,000 uninsured/underinsured property |
| Virginia | Bodily injury and property damage liability, uninsured/underinsured motorist | 50/100/25, $50,000 uninsured/underinsured per person, $100,000 uninsured/underinsured per accident, and $25,000 uninsured/underinsured property |
| Washington | Bodily injury and property damage liability | 25/50/10 |
| Washington, D.C. | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/10, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, and $10,000 uninsured/underinsured property |
| West Virginia | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/25, $25,000 uninsured/underinsured per person, $50,000 uninsured/underinsured per accident, and $25,000 uninsured/underinsured property |
| Wisconsin | Bodily injury and property damage liability, uninsured/underinsured motorist | 25/50/10, $25,000 uninsured/underinsured per person, and $50,000 uninsured/underinsured per accident |
| Wyoming | Bodily injury and property damage liability | 25/50/20 |
What Liability Insurance Does Not Cover
It's important to understand the exclusions in your auto insurance policy. The following limitations are instances not covered by your liability insurance.
Your Vehicle
Liability car insurance never covers damage to your own vehicle. To cover your vehicle in the event of an accident, damage due to weather or animal collisions, vandalism, or theft, you need collision and comprehensive coverage.
Your Injuries
Liability coverage covers other people involved in the accident, but it does not cover you individually. It may or may not cover your passengers, depending on your policy and if your passengers are related to you. However, your medical bills, lost wages, and pain and suffering would not be covered. Your personal health insurance, Medical Payments Coverage (MedPay), or Personal Injury Protection (PIP) coverage would be required to cover those costs.
When You're NOT At Fault
If someone hits you, your liability coverage doesn't help you. The other driver's liability coverage should cover you. Uninsured/underinsured motorist coverage and collision coverage are good policies to look into to protect yourself.
Intentional Damage
Liability coverage does not kick in if the accident is not accidental, such as road rage incidents, using your car as a weapon, or deliberately hitting another vehicle. These would be criminal and not accidental.
Business Use
If you are using your vehicle for income, including delivering for InstaCart/DoorDash/Uber Eats, driving for rideshare services like Uber/Lyft, or providing commercial deliveries for companies like USPS/FedEx/UPS, you need commercial auto insurance or a rideshare endorsement on your policy. Liability coverage will not apply in these use cases.
Liability-Only Versus Full Coverage
Liability-only insurance can be a huge liability (pun intended) if you drive a vehicle worth more than $5,000. If you finance or lease your vehicle, your lender usually requires additional coverages on your auto insurance policy, like collision and comprehensive coverage.
| Liability-Only | Liability + Collision + Comprehensive Coverage + PIP | |
|---|---|---|
| Damage to my vehicle | Not covered | Covered |
| Damage to the other vehicle(s) | Covered | Covered |
| Property damage | Covered | Covered |
| Medical bills for others involved | Covered | Covered |
| My medical bills | Not covered | Covered |
| Lost wages for others involved | Covered | Covered |
| My lost wages | Not covered | Covered |
| Legal defense if I'm sued | Covered | Covered |
| Someone steals my car | Not covered | Covered |
| Weather causes damage (tree falls, hail, etc.) | Not covered | Covered |
| Someone vandalizes my car | Not covered | Covered |
| Liability-Only May Makes Sense IF: | You May Need More Than Liability Insurance IF: |
|---|---|
|
• Your car is worth less than $3,000 • You have savings to replace the car • Your car is paid off (no loan/not leased) • AND You can absorb the loss |
• Your car is worth more than $5,000 • You can't afford to replace the car • You have a car loan/lease (Usually required) • OR You own a newer vehicle (less than 8 years old) |
The Risk Of Minimum Liability Coverage
The minimum liability coverage for your state may not be enough to cover the costs if you're involved in an auto accident. If your liability coverage limits are less than the damages you caused, your other assets, like your home, savings, or retirement, could be in jeopardy. That's why most financial experts recommend paying for at least 100/300/100. Many experts recommend you step up to 250/500/100 if you own a home. For high-net-worth individuals, a 500/1000/500 or an umbrella policy would be a good idea.
Stepping up to a higher tier of liability coverage may only impact your premium by a couple of hundred dollars per year, but it's worth every penny if you cause a serious accident. An insurance agent should be able to provide a quote.
When Does Liability Insurance Pay?
Liability only pays when you cause the accident. It does not pay if the damage was intentional or if you were not the driver at fault.
Examples Where Liability Pays:
- You ran a red light
- You were speeding
- You were distracted and rear-ended someone
- You changed lanes without looking
- You caused a multi-car pileup
Examples Where Liability Doesn't Pay:
- Someone hits you (their liability pays, not yours)
- You're hit by an uninsured driver (need uninsured motorist coverage)
- A deer jumps in front of you (comprehensive, not liability)
- No fault determined (varies by state)
No-Fault States: In 12 no-fault states, you file with your own insurance regardless of fault (this is where Personal Injury Protection, or PIP, kicks in), but liability still applies for serious injuries and property damage.
Do You Have Enough Liability Coverage?
| You may be underinsured if | You may have adequate coverage if | You are probably well insured if |
|---|---|---|
|
• You have state minimum coverage (often not enough) • You own a home • You have significant savings/investments • Your net worth exceeds your liability limits • You can't afford to pay thousands of dollars out-of-pocket |
• You have 100/300/100 or higher • Your limits match or exceed your net worth • You could cover excess without financial devastation |
• You have 250/500/100 or higher • You have an umbrella policy • Your assets are fully protected |
Factors Affecting Liability Costs
Liability car insurance coverage rates differ based on the driver, driving record, location, and coverage limits. Age and credit score may also impact costs. Your insurance company evaluates all these factors when determining your insurance rates.
FAQs
What does liability insurance cover?
Liability insurance covers damage and injuries you cause to other people and property, such as car repairs, medical bills, lost wages, pain/suffering, or property repair. It also covers your legal fees if you're sued. It does not cover your vehicle or your injuries.
Does liability insurance cover my car if I'm at fault?
No. Liability insurance only covers damage to other people's property and injuries. If you do not have comprehensive and collision coverage, you would be responsible for the repair or replacement of your vehicle.
What does 25/50/25 mean in car insurance?
25/50/25 represents the limits your liability coverage will pay: $25,000 maximum per person for bodily injury, $50,000 maximum per accident for all injuries combined, and $25,000 maximum for property damage. States have different minimum requirements, but experts often recommend more than the minimum for better protection against lawsuits and large claims.
Is liability insurance enough?
It depends. More experts recommend getting more than the state's minimum requirements for liability insurance to cover you in the event of a lawsuit or large claims. If you can afford to replace your own vehicle and you have adequate health insurance, you may not need other coverage. However, if your car is worth more than $5,000, you have a loan, or you can't afford to replace your car out-of-pocket, then you might need a different type of coverage, like collision and comprehensive insurance, as well.
Does liability insurance cover hitting a parked car?
Yes, liability covers the damage to the parked car you hit, but it does not cover damage to your car.
What happens if I only have liability insurance?
If you cause an accident with liability-only insurance, the other vehicles and people involved are covered up to your coverage limits, but you pay 100% out of pocket for your own car repairs and medical bills. Additionally, if someone else hits you, you rely on their insurance to cover you. Liability-only leaves significant gaps in your coverage should the at-fault motorist be uninsured or if your car is stolen, vandalized or damaged by weather or in a single-vehicle incident.
Does liability cover a stolen car?
No, liability only covers damage you cause to other vehicles. Theft is typically covered by a comprehensive insurance policy. If your car is stolen and you have liability-only insurance, you will not receive an insurance payout.
How much liability insurance do I need?
Most financial experts recommend at least 100/300/100. And more if you own a home or have significant assets. A good rule of thumb is that your liability limits should roughly equal your net worth. State minimum limits are low for today's vehicles and medical costs.
