What Is Liability Car Insurance? State-Required Coverage Explained

Liability coverage is a type of car insurance that covers another person’s medical expenses or repairs after an accident that you are responsible for. As a result, it provides a safety net that keeps you from bearing the entire financial burden after a costly accident. In addition, liability coverage is required by law in almost every state.

Read below for more information on how liability car insurance works and what situations it covers.

On This Page

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  What Is Covered By Liability Car Insurance?

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  Does Liability Car Insurance Have Limits?

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  What Isn’t Covered By Liability Car Insurance?

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  How Much Does Liability Car Coverage Cost?

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  Is Liability Insurance Required?

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  How Much Liability Coverage Do I Need?

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  FAQs

What Is Covered By Liability Car Insurance?

Liability car insurance covers injuries you inflict on another person and damage you cause to their property as long as you did not do so intentionally. There are two types of liability coverage: bodily injury liability and property damage liability.

Bodily injury liability covers medical bills, lost wages and funeral expenses for other people after an accident you are responsible for. It would kick in for a single pedestrian that you struck with your car or another driver and their passengers if you caused a collision. In addition, bodily injury liability would cover legal expenses if any of the injured parties decided to sue you.

Property damage liability pays to repair another person’s car, home or belongings if you crash into them. This would apply after a serious collision or if you merely ran over your neighbor’s mailbox while backing out of your driveway. Property damage liability also pays to repair any public property that you crash into.

Does Liability Car Insurance Have Limits?

Car insurance policies come with a limit on the total amount of money you can receive for a covered claim. For liability insurance, limits are typically given in an A/B/C format, where A is the amount of bodily injury liability for one person, B is the amount of bodily injury liability for multiple people and C is the amount of property damage liability.

For example, many states set their minimum liability coverage requirements at 25/50/25. This means your policy would have to provide at least $25,000 for any one person injured in an accident, $50,000 for all of the people injured in an accident and $25,000 for property repairs.

Your insurance company will not pay for losses that exceed your coverage limits.

For example, if you cause a car accident that injures a family of four and they rack up $100,000 in medical expenses but your policy has a total bodily injury liability limit of $50,000, then you would have to pay $50,000 out of pocket.

What Isn’t Covered By Liability Car Insurance?

Liability car insurance coverage does not include medical expenses for yourself and your passengers or repair costs for your vehicle. However, there are often other coverage types you can purchase that will cover the expenses your liability coverage won’t.

Below are some situations that aren’t covered by liability coverage and what types of car insurance would account for them instead.

You can usually receive coverage for several of the situations listed above by purchasing a full coverage policy. While there is no set definition for full coverage, it typically includes liability insurance, collision coverage, comprehensive coverage and any other coverage types required in your state. A policy that meets only your state’s minimum requirements with no additional coverages added is sometimes referred to as liability-only car insurance.

How Much Does Liability Car Coverage Cost?

The average cost for a liability-only car insurance policy in 2020 was $631.19. In comparison, the average annual premium for collision coverage was $370.73, while the premium for comprehensive coverage was $174.26.^[1]

Exact prices will vary from person to person and from insurance company to insurance company. Some of the factors that can influence the cost of your car insurance include the following:

• Age: Inexperienced teenage drivers typically have higher liability insurance rates than middle-aged drivers because they are more likely to cause a car accident.
• Gender: In some states, men may pay higher rates than women since they are statistically more prone to costly accidents.^[2] However, insurance companies are not allowed to consider gender when calculating rates in California, Hawaii, Massachusetts, Michigan, Montana, North Carolina or Pennsylvania.^[3]
• Driving and claims history: A high-risk driver who has been in multiple accidents will have to pay a higher premium than someone who has never been in an accident. Likewise, anyone who has filed an insurance claim in the past is considered more likely to do so again than someone who has never filed an insurance claim, meaning they will have to pay a higher premium.
• Coverage limits: If you lower your coverage limits, your insurer will be responsible for paying less toward covered losses. While this would provide you with less coverage, it would also lower the cost of your premium. Keep in mind that you can’t lower your limits below your state’s minimum requirements.
• Number of drivers: A car insurance policy that covers multiple people will cost more than a policy that covers only one driver, although many insurance companies offer discounts on multi-car policies.
• Location: Drivers in urban areas often pay higher rates than those in rural areas since they are more likely to get into a car accident.

Is Liability Insurance Required?

Some form of liability insurance is required by law in the District of Columbia and every state except for New Hampshire and Virginia. Uninsured drivers in New Hampshire have to show proof that they have enough money to cover the costs of an accident to satisfy the state’s financial responsibility requirement.^[4] Meanwhile, you have to pay an annual $500 Uninsured Motor Vehicle fee to drive without car insurance in Virginia.^[5]

Of the remaining 48 states, only Florida allows drivers to go without bodily injury liability coverage. Meanwhile, all of those states plus D.C. also require drivers to carry property damage liability coverage.

How Much Liability Coverage Do I Need?

Every state sets its own requirements for the types of car insurance you must purchase and how much liability coverage you need. Most states display their liability requirements in the A/B/C format, although some states allow you to purchase a policy with a single limit for all events covered by liability insurance.

Below is an overview of the minimum requirements for liability coverage limits in each state.^[6]

You may want to consider purchasing a policy with higher coverage limits than what your state requires. For example, if your policy only provides $25,000 worth of property damage liability but you total someone’s $50,000 car, then you would have to pay $25,000 out of pocket. As a result, it is commonly recommended that you purchase a 100/300/100 policy instead.^[7]