Liability car insurance is designed to cover the costs of damages where you’re responsible, fully or partly, for a car accident. It ensures that other drivers, pedestrians, and their property are protected financially. That’s why it’s considered the minimum car insurance coverage that’s required in almost every state.
Let’s dig into how liability car insurance coverage works, and how it can help put your mind at ease when you get behind the wheel.
Here’s what we’ll discuss:
- What is liability coverage?
- What does liability car insurance cover?
- Is liability car insurance mandatory in all states?
- How much liability coverage do I need?
- How much does liability car insurance typically cost?
- What does liability insurance not cover?
What is liability insurance coverage?
Liability insurance helps pay for damages or injuries you might accidentally cause to someone else or their property. This way, you’re not stuck with all the expenses yourself.
And it’s not just something for car accidents. Lots of insurance policies include some kind of liability coverage. For example, if a friend slips and falls on your icy driveway and gets injured, your homeowners personal liability insurance would help cover their related medical expenses for eligible claims.
What does liability car insurance cover?
In general, liability car insurance refers to the car insurance coverage that addresses what happens after a car accident when you’re at fault—or even partially at fault, in some states. It covers and protects other drivers and pedestrians, which is why most states have set minimum coverage limits.
In the context of car insurance, there are two main types of liability insurance:
- Bodily injury liability: Covers medical expenses, lost wages, and legal fees if you injure someone in a car accident
- Property damage liability: Pays for repairs to someone else’s vehicle or property damage caused by your car in an accident
Is liability car insurance mandatory in all states?
Liability car insurance is mandatory in almost every US state. Each state sets minimum required limits for both bodily injury liability and property damage liability coverage. These requirements ensure that drivers have at least basic financial protection in case they cause an accident.
However, there are a few exceptions—like New Hampshire and Virginia, but even in these states, drivers must either prove they can pay for damages in case of an accident or opt to pay a fee for driving uninsured.
It’s important to check the specific requirements of your state and consider that even the minimum required coverage might not be enough to fully protect you financially in case of an accident.
How much liability coverage do I need?
Most states have passed insurance requirements with minimum limits—including both per person and per incident—for bodily injury liability coverage. Here’s how each works:
- Per person injury limit: Maximum amount that will be paid to any one injured person in the accident
- Per accident injury limit: Maximum amount that will be paid to all injured persons in the accident
Some insurance companies will include a third limit that’s a per accident limit for property damage liability claims. This is the maximum amount that the insurer will pay for damage to other cars or property resulting from the accident.
Minimum limits range from $10,000 to $50,000. But you’ll want to select enough coverage—perhaps more than the bare minimum required—so that you’ll feel fully protected in case of a crash.
When you get an insurance quote and pick the amount of coverage you need, your insurance company will probably have a default suggestion to help you end up with the right amount.
Keep in mind: If an accident costs more than your insurance covers, you’ll have to pay the extra amount yourself. Make sure to select liability coverage limits that you’d feel comfortable paying the difference, with insurance premiums that fit your budget.
How much does liability car insurance typically cost?
The national average car insurance cost for bare bones liability car insurance coverage is $685 a year for a good driver with good credit, according to a 2023 rate analysis by NerdWallet.
The cost of this type of coverage depends on the bodily injury liability and property damage liability limits you pick, the type of car you drive, and other factors—like your driving record. When getting an insurance quote, ask your insurance company to show you several options and how they impact your policy price.
What does liability insurance not cover?
Liability coverage will not cover damage to your own car or property in the event of a car accident, nor will it cover your own medical bills from a crash. Those are covered under different coverage options, such as collision coverage and comprehensive coverage, and medical payments coverage or personal injury protection.
You can find out more about the various types of required and optional car insurance coverages here.
A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them. Coverage and discounts may not be available in all states.
