Liability car insurance coverage

Most states require drivers to buy liability insurance before hitting the road.

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When drivers talk about auto insurance, they’re usually referring to liability coverage. This is the insurance that covers you if you’re at fault in an accident and you need to pay for the resulting costs.

What does “at fault” mean? Being at fault means you’ve caused an accident. In most states, being at fault means your insurer will pay for car repairs, medical bills and other costs that result from the incident.

What is liability coverage?

While you’re driving, there’s always a risk that you’ll be at fault for an accident. Maybe you’ll hit another car, injure another person or damage someone’s property. Of course, you’ll need to pay for the resulting costs — whether those include car repairs, medical expenses or replacing damaged property.

Those costs can increase rapidly. To avoid paying these costs out of your own pocket, you buy liability coverage to protect yourself. Liability coverage will pay for most or all of your costs should you be on the hook for any damages.

Types of liability coverage

There are two types of liability coverage: bodily injury liability and property damage liability.

  • Bodily injury liability pays for costs if you’ve injured another person in a car accident. This pays for medical bills and lost wages caused by the accident.
  • Property damage liability pays for costs if you’ve damaged another person’s property in a car accident. That includes damage to cars, trees, fences or other objects.

On an online quote or your policy, it might look like 50/100/50, which means $50,000 bodily injury liability per person, $100,000 bodily injury liability per incident and$50,000 property damage liability per incident.

How liability coverage works

When you’re buying car insurance, you’ll need to choose the amount of liability coverage you want. Your policy will either be split limit or combined single limit.

Split limit policy

While shopping for liability coverage, you may see an insurance policy express as “25/50/15.” When you see numbers expressed in this way, you’re looking at a split limit policy.

These numbers are just shorthand for how much your insurance will cover you for:

  • The first number is the individual payment limit per accident for bodily injury. The “25” in our example refers to $25,000. It’s how much your insurance will cover for each person’s bodily injury costs (other than yours). For example, if you’ve injured someone in an accident and their medical bills are $20,000, you’re covered.
  • The second number is the overall payment limit per accident for bodily injury. The “50” refers to $50,000. It’s how much your insurance will cover for the total bodily injury costs in an accident (other than yours). For example, if you’ve injured five people and their medical bills are $20,000 each, you’re on the hook for $100,000. In this case, your policy will cover $50,000, and you’ll need to pay the other $50,000 yourself.
  • The third number is the overall payment limit per accident for property damage. The “15” refers to $15,000. It’s how much your insurance will cover for the total cost of property damage in an accident. (This doesn’t include your own vehicle — instead, you’ll need collision coverage for that.) For example, if you rammed into a barn and it costs $6,000 to repair it, your insurance will cover the expenses.

The three numbers will change to create different policies. Your state will most likely have policy minimums, but otherwise you’re free to choose the right mix for your own needs.

Combined single limit policy

A combined single limit policy offers one coverage limit.

Let’s say you took out $200,000 of combined single limit coverage. In the event of an accident, you can split this coverage between different types of damages. For example, you’d be covered in these instances:

  • One person’s medical bills totals $150,000, and there’s $30,000 in property damage.
  • The medical bills of four people total $200,000.
  • You caused property damage that costs $180,000. You also need to pay for someone’s medical bill of $15,000.

All of those costs are $200,000 or less, so your insurance will cover them.

Does liability insurance come with a deductible?

Liability coverage usually doesn’t come with a deductible. For example, if you hit someone else’s car and your insurance covers the cost of repairs, you won’t have to pay out of your pocket.

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How much liability coverage do I need?

Though you’ll be ready to drive if you meet your state minimum required coverage, you may want to buy a higher amount of coverage. The average claim for bodily injury is around $15,000 per person, and the average claim for property damage is around $3,000. But both types of costs can increase quickly — especially in accidents that involve multiple vehicles.

If you select the bare minimum liability limits, you’ll be left to pay the excess damage expenses out of pocket. Also, you could appear high-risk to insurance companies, since you’re passing on more responsibility. As a rule of thumb, many experts recommend buying policies that at least cover the value of your assets.

For example, if your car is worth $30,000, it might be wise to have property damage limits of at least $30,000. That way, even in a worst case scenario where you cause an accident and your car is totaled, you can cover the full cost of getting a replacement car.

What are the requirements for New Hampshire and Virginia?

If you live in New Hampshire, you’re not required to have auto insurance. However, you need to prove you can pay if you cause bodily injury or property damage. The easiest way to do this, of course, is by purchasing insurance.

It’s not mandatory to have auto insurance in Virginia either. But like in New Hampshire, you must prove that you can pay for costs stemming from bodily injury or property damage. You can do that by either buying insurance or paying a fee to Virginia’s DMV.

How much does liability coverage cost?

The overall cost of liability coverage will vary considerably depending on your age, where you live and your driving history, among other factors. As a ballpark, expect it to cost between $1,000 and $2,000 a year. However, if you’re just looking for the state minimum required coverage, you could spend far less. While this option isn’t right for everyone, compare sample quotes to see if it could be a good fit for your budget.

Liability-only insurance quotes

CompanyAverage annual rateLearn more
Geico$394Read review
USAA$416Read review
Progressive$536Read review
Grange$557Read review
Mercury$564Read review
Esurance$609Read review
Kemper$615Read review
21st Century$651Read review
Allied$666Read review
Nationwide$666Read review
Allstate$693Read review
Liberty Mutual$709Read review
State Farm$726Read review
The Hartford$727Read review
Average$598Compare all reviews

What’s not covered by liability insurance?

While this coverage is required, you might need other coverages to be fully protected. Here are some things not included in liability insurance:

  • A car accident you caused. If you have a long commute or drive a newer vehicle, you might want collision coverage to protect you from pricier repair costs.
  • Damage to your car not caused by a car crash. Comprehensive coverage keeps you protected for things like theft, vandalism or an object hitting your car.
  • Medical bills. Personal injury protection can help with medical expenses or finances after a car crash.
  • Uninsured drivers. Underinsured coverage will protect you if someone can’t pay for your damages in a crash they caused.

Bottom line

In all states but Virginia and New Hampshire, liability coverage is required for every driver. Your state will likely have coverage minimums, but consider purchasing higher coverage limits to protect your assets.

Shop around to find the best deal on liability coverage for your car insurance policy.

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