Liability car insurance: What does it cover and how much does it cost?

Liability car insurance pays for the injuries and property damage you cause in an at-fault accident. 

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

Bodily injury liability insurance covers injuries to people in an accident that’s your fault. Property damage liability insurance covers the damage to another driver’s vehicle as well as any structural damage you cause in an accident. Limits are written as a set of numbers, for example, 50/100/50, which means $50,000 for bodily injury per person, $100,000 for bodily injury per incident and $50,000 for property damage per incident.

The average cost for liability-only car insurance with coverage limits of 50/100/50 is $647 annually or about $54 per month. 

But you can get less coverage. Drivers are typically required to buy just a minimum amount of liability coverage. The amount differs from state to state but is often 25/50/25. Most experts, however, advise getting 100/300/100 coverage.

Note that liability car insurance does not pay for damage or injuries to yourself or your property. Other forms of car insurance cover that, such as collision coverage (which covers your damages from a crash), comprehensive coverage (which covers damage from non-collision events like the weather), and medical payments coverage.

Instead, liability car insurance applies explicitly to claims others make against you or another driver covered under your policy.

Getting liability coverage is important for meeting compliance requirements and protecting your finances if you cause extensive damage in an accident.

Read more: Find the cheapest liability car insurance in 2024

Key highlights

• Liability car insurance protects against the damage or injuries you might cause others, rather than your own injuries or property damage.
• Most states require liability car insurance, but their minimum requirements are often less than needed to provide sufficient risk management.
• Depending on factors such as your risk tolerance and the value of your assets, you may find paying higher premiums for higher coverage limits is worthwhile.

How does liability car insurance work?

Liability car insurance works by setting coverage limits that apply to bodily injury and property damage you cause other drivers, their passengers, pedestrians or other bystanders/affected parties. In other words, liability car insurance protects you from claims that others who were not in your vehicle make against you.

When you hear the word liability, it means it pays the other person,” says Alaina Hixson, a Nashville-based director of sales and operations at The Churchill Agency, an independent agency offering home, auto and life insurance nationwide.

All states besides New Hampshire require at least some level of liability car insurance, though even these states have certain requirements around liability car insurance if other financial responsibility conditions are not met. However, coverage limits vary significantly from state to state.

Without liability auto insurance or without sufficient limits, assets like your home and vehicles are at risk. You could be personally liable for damages above your coverage limits. Thus, obtaining the proper level of liability protection is critical.

What does liability insurance cover?

Liability car insurance covers bodily injury and property damage. For bodily injury coverage, liability insurance covers among other things:

• Medical bills
• Funeral expenses
• Lost income
• Pain and suffering
• Legal defenses

For property coverage, liability insurance covers such things as:

• Car repair or replacement
• Personal property repair or replacement, e.g., fixing a broken fence or replacing jewelry damaged in a crash
• Government property repair or replacement, e.g., repairing a damaged signpost

What doesn’t liability insurance cover?

Liability car insurance does not cover:

• Damages to your own vehicle
• Damages to your own property
• Injuries to yourself or your passengers

“Liability is covering the other person; it really isn't there to protect you in a physical sense of bodily injury and/or your vehicle. Many people see the word ‘property damage’ and think if their vehicle gets damaged, that is the property [that’s] protected. But that is incorrect, as your own vehicle coverage would be covered under comprehensive and collision coverage,” Hixson says.

How much liability insurance do I need?

Figuring out how much liability insurance you need starts by looking at state minimums, but many people end up benefiting from obtaining higher policy limits. In general, the more assets you own that could be at risk if you face a lawsuit from an accident, the higher the liability insurance limits you need.

"Accidents can be very minor, but people lawyer up very quickly and they want to go after belongings, so you have to take great consideration of what you own and what you need to protect,” Hixson says.

If you only went by the minimum in a state like California, you’d need liability insurance with 15/30/5 coverage — meaning $15,000 per person/$30,000 per accident for bodily injury and $5,000 per occurrence for property damage. However, that might not be nearly enough to sufficiently manage your financial risk.

For example, Hixson says she doesn’t like to write policies below 100/30/100 limits. With property damage coverage, having at least $100,000 in liability insurance is important because vehicles have gotten extremely expensive.

“Even in a minor accident, you can have three cars get in a fender bender and easily exceed $25,000 — maybe even $50,000,” she says.

Depending on your needs, even other states with higher limits than California might not have sufficiently high minimum requirements.

For property damage limits, “$25,000 tends to be the state minimum, but it really doesn't cover much of anything. If you get in an accident and you're not involved with any other vehicles, you could still cause damage to state property or businesses, like a sign or something similar. That would fall under property damage, and all of that adds up very quickly,” Hixson says.

How much does liability insurance cost?

As mentioned earlier, the average rate for 50/100/50 liability insurance for a 40-year-old male with a clean record driving a 2023 Honda Accord LX is $647 per year, or $54 a month, based on an analysis of rate data from Quadrant Information Service.    

As you increase liability limits, premiums also increase. But paying a little bit more per month — e.g., $12 on average to move up from the state minimum to 50/100/50 coverage — can save you tens of thousands of dollars, if not more, in the case of a crash. Depending on factors like your assets and risk tolerance, you might find that paying more for higher limits makes sense.

“For example, $50,000 of liability coverage is a lot less expensive than $300,000 or $500,000 worth of coverage, but if the consumer has a considerable amount of assets, and [the] risk factors for the area where they live and drive are high, then they may want to consider purchasing higher limits,” says Hugh Allen, principal product strategist at Hi Marley, a communications platform for property and casualty insurers.

You might be able to find cost-saving opportunities even at higher coverage limits, but ultimately, you’ll need to weigh how premiums compare to your risk tolerance.

“If you have aligned your personal risk appetite effectively to your liability coverage, the best way to reduce the cost of your premium is to increase your deductible and/or shop around for the best deal,” Allen says.

Frequently asked questions

Can liability insurance cover damage to my car?

No. Your liability insurance policy only covers damage to others’ property. Comprehensive and collision insurance cover damage to your own car. Some drivers choose liability-only car insurance to lower upfront costs, but that could leave you paying for your own car repairs and medical bills.

How does liability insurance differ from full coverage?

Liability insurance differs from full coverage in terms of scope and cost. Full coverage insurance generally includes comprehensive, collision and liability insurance instead of liability-only. Because of the additional coverage, rates for full coverage insurance can be roughly two to three times more expensive, depending on your personal factors.

Can I adjust my liability coverage after purchasing a policy?

Yes, you can adjust your liability coverage after purchasing a policy by increasing or decreasing coverage limits.

What happens if my liability limits are exceeded in an accident?

If your liability limits are exceeded in an accident, you could be held personally liable for any remaining amounts. These amounts could be garnished from your wages.

Does liability insurance cover hit-and-run accidents?

Liability insurance covers injuries or damage you cause to others, whereas a hit-and-run generally means the person at fault is unknown. So, in that sense, liability insurance does not cover hit-and-run accidents. Uninsured motorist bodily injury coverage will pay for your injuries up to your policy limits in case of a hit-and-run accident. Collision coverage pays for any damages to your vehicle, and medical payments and personal injury protection (PIP) cover you and your passengers.

How does liability insurance work in no-fault states?

In no-fault states, drivers must first make claims through their own personal injury protection (PIP) insurance for injuries, regardless of who was at fault in an accident. However, depending on the state and the situation, additional monetary damages beyond PIP limits could be awarded to the victim through the at-fault driver’s liability insurance, or the at-fault driver could be personally liable for excess amounts. No-fault insurance only applies to injuries and not property damage.

Methodology

Editors collected rate information from auto insurance comparison site CarInsurance.com and its data partner Quadrant Information Services for single, 40-year-old male and female drivers of a 2023 Honda Accord LX with a good insurance score and no violations on their record for an insurance policy with liability limits of 50/100/50.

We analyzed more than 53 million quotes, more than 34,000 ZIP codes and 170 insurance companies nationwide.

Note: 50/100/50 means up to $50,000 for the medical bills of those you injure, up to $100,000 per accident for bodily injury liability for all persons injured in one accident, and $50,000 to repair other drivers’ cars and property that you damage.