Liability coverage pays for damage or injury you cause to someone else in an accident
Liability coverage is the part of your car insurance that covers medical bills, lost wages, property damage, and legal costs when you're found responsible for an accident. It does not cover damage to your own car or injuries to you — that's what collision, comprehensive, and medical payments coverage do. Every state except New Hampshire requires you to carry some minimum amount of liability coverage before you can legally drive.
Liability coverage has two parts: bodily injury liability, which covers injuries to other people, and property damage liability, which covers damage to someone else's vehicle or property. Insurance companies sell these as separate limits, so you choose how much protection you want for each. The minimum amounts vary by state, but they're typically low — often $25,000 per person for injuries and $50,000 total per accident. Most people carry higher limits because a serious accident can easily exceed those minimums.
Key Takeaways
- Liability coverage pays for injuries and property damage you cause to others, not damage to your own vehicle.
- Every state except New Hampshire requires a minimum amount of liability coverage as a legal condition of driving.
- Bodily injury liability covers medical bills and lost wages for injured people; property damage liability covers damage to vehicles and property.
- Minimum state requirements are usually low, and carrying higher limits protects your personal assets if you cause a serious accident.
- If you cause an accident and your liability limit is too low, you can be sued personally for the difference.
How bodily injury liability works
Bodily injury liability covers medical treatment, hospital stays, surgery, rehabilitation, lost income, and pain and suffering for anyone injured in an accident you cause. If you hit another car and the driver breaks their arm, their medical bills come from your bodily injury coverage. If a passenger in their car is injured, their bills come from the same coverage. The insurance company will pay up to your policy limit per person and up to a total limit per accident.
Your policy limit is written as two numbers — for example, 100/300. The first number ($100,000) is the maximum the insurance company will pay for one person's injuries. The second number ($300,000) is the maximum they'll pay total for all injuries from that one accident. If three people are injured and each has $150,000 in medical bills, your 100/300 policy would pay $100,000 to each person (hitting the per-person limit) and stop at $300,000 total, leaving $150,000 unpaid.
How property damage liability works
Property damage liability covers damage to someone else's vehicle, fence, mailbox, storefront, or any other property you damage in an accident. If you back into a parked car and cause $8,000 in damage, your property damage liability pays for the repairs. If you hit a utility pole and damage it, your coverage pays for that too. The insurance company pays the repair cost or the actual cash value of the property, whichever is less.
Property damage liability has a single limit — often $25,000 or $50,000 depending on what you chose. That limit applies per accident, not per person or per item. If you cause an accident that damages three cars and a fence, and the total damage is $60,000, a $50,000 property damage limit would pay $50,000 and leave you responsible for the remaining $10,000.
What liability coverage does not cover
Liability coverage does not pay for damage to your own vehicle, no matter who caused the accident. If you hit another car and your car is damaged, your collision coverage (if you have it) pays for your repairs. Liability also does not cover your own medical bills or lost wages — that's what medical payments coverage or personal injury protection is for.
Liability coverage also does not cover intentional damage, damage from racing or illegal activity, or damage that happens while someone else is driving your car without permission. It also does not cover business use if your policy is written for personal use only. If you use your car for rideshare or delivery, you need commercial or rideshare coverage in addition to your personal policy.
State minimum requirements and why they matter
Every state sets a minimum amount of liability coverage you must carry. These minimums are usually low — many states require only 15/30/25, meaning $15,000 per person for injuries, $30,000 total per accident for injuries, and $25,000 for property damage. Some states require higher minimums. You can look up your state's requirement on your state insurance commissioner's website or ask your insurance agent.
Carrying only the state minimum is risky. A single serious accident can easily cost more than the minimum. If you cause an accident where someone is permanently injured or dies, medical bills and legal judgments can reach hundreds of thousands of dollars. If your liability limit is $30,000 and the judgment is $200,000, you're personally responsible for the $170,000 difference. The insurance company will not pay it, and the injured person can pursue your wages, bank accounts, and other assets to collect.
How much liability coverage you should carry
Insurance agents often recommend carrying limits of at least 100/300/100 ($100,000 per person, $300,000 total per accident, $100,000 property damage) or higher. The right amount depends on your assets, your driving habits, and your risk tolerance. If you have a house, savings, or investments, higher limits protect those assets from being seized in a lawsuit. If you drive frequently or in heavy traffic, higher limits reduce your financial risk.
Some people buy an umbrella policy for additional liability protection beyond their car insurance limits. An umbrella policy typically covers $1 million or more and costs $150 to $300 per year. It kicks in only after your car insurance liability limit is exhausted, so it's a safety net for serious accidents. If you have significant assets or a high income, an umbrella policy is often worth the cost.
What happens if you cause an accident and your limit is too low
If you cause an accident and the injured person's damages exceed your liability limit, the insurance company pays up to your limit and stops. The injured person can then sue you personally for the remaining amount. They can obtain a judgment against you, which allows them to garnish your wages, place a lien on your house, or seize money from your bank account.
The insurance company will defend you in court up to your policy limit, but once the limit is reached, you're on your own. You may need to hire your own attorney, which costs thousands of dollars. Even if you win the case, you've spent money defending yourself. If you lose, you could be paying off a judgment for years.
Frequently Asked Questions
Does liability coverage pay for my own car if I cause an accident?
No. Liability coverage only pays for damage you cause to someone else's property or injuries to other people. Damage to your own vehicle is covered by collision coverage (if you have it), which is a separate part of your policy. You have to choose and pay for collision coverage separately.
What if someone else is driving my car and causes an accident?
Your liability coverage typically covers accidents caused by anyone driving your car with your permission. The injured person can claim against your policy, not the driver's. If the driver has their own car insurance, both policies may be involved, but yours is usually primary. If someone drives your car without permission, your coverage may not apply.
Can I be sued personally if my liability limit is too low?
Yes. If damages exceed your policy limit, the injured person can sue you personally for the difference. A judgment against you can result in wage garnishment, bank account seizure, or a lien on your home. This is why carrying higher limits or an umbrella policy is important if you have assets to protect.
Do I need liability coverage if I have an older car?
Yes. Every state except New Hampshire requires liability coverage regardless of your car's age or value. Liability coverage protects the other person, not your car. Even if your car is worth very little, you still need liability coverage to cover injuries or damage you cause to others.
What's the difference between bodily injury and property damage liability?
Bodily injury liability covers medical bills and lost wages for injured people. Property damage liability covers damage to vehicles, buildings, and other property. They have separate limits, so you choose how much of each you want. Most accidents involve both, so you need both types of coverage.