What Is Liability Insurance for Auto Coverage?
Liability insurance pays for injuries and property damage you cause to others in an at-fault accident.
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What Is Liability Insurance Insurance?
Liability insurance has two parts: bodily injury (BI) liability pays medical expenses, lost wages, and legal fees when you injure someone in an accident you caused; property damage (PD) liability pays to repair or replace the other party's vehicle, fence, building, or other property you damage. Both coverages only pay out when you're legally responsible for the accident. If the other driver is at fault, their liability insurance pays your damages — or you'd file under your own collision or uninsured motorist coverage if they have none.
Who Needs Liability Insurance Insurance?
Every driver who's legally required to carry it (48 states), and especially those with assets to protect — a home, savings, or garnishable wages. If you cause a serious accident and lack adequate liability coverage, the injured party can sue for your personal assets and future income. Drivers with prior at-fault accidents or tickets should carry higher limits (100/300/100 or more) since their risk profile makes another claim statistically more likely, and a second at-fault accident often triggers non-standard insurance with far higher costs.
If you're legally required to carry it, carry at least your state minimum — but calculate whether you have assets or income worth protecting, and if so, increase your limits to 100/300/100 or higher. A simple test: add up your home equity, savings, retirement accounts, and one year of income; if that total exceeds your liability limits, you're underinsured.
How Much Does Liability Insurance Insurance Cost?
- Where you live and park your car — urban areas with higher accident rates and more uninsured drivers (like Detroit or Los Angeles) cost significantly more than rural zip codes.
