Liability Car Insurance: What It Covers and Why You Need It
What liability insurance covers
Liability car insurance pays for the financial harm you cause to others when you are at fault in an accident. It has two components:
- Bodily injury liability (BI): Covers medical bills, lost wages, pain and suffering, and legal costs for people you injure.
- Property damage liability (PD): Covers repairs to other vehicles, structures, fences, and other property you damage.
It does not pay for your own injuries or your own vehicle. Those require separate coverages.
How liability limits work
Liability policies are sold with three limits, written as three numbers separated by slashes:
| Limit | Meaning |
|---|---|
| First number | Maximum per injured person (bodily injury) |
| Second number | Maximum per accident, all injured people (bodily injury) |
| Third number | Maximum for property damage per accident |
Example: a 50/100/50 policy pays up to $50,000 for one person's injuries, $100,000 total for all injuries in one accident, and $50,000 for property damage.
State minimum requirements
Every state sets its own minimum liability limits. Most require at least 25/50/25, though some are lower or higher. See the State Rules section for your state's specific requirements.
Minimums are a legal floor, not a recommended limit. A serious crash can easily exceed $100,000 in medical bills alone, leaving you personally responsible for anything above your coverage limit.
How much liability coverage do you need?
A common guideline: carry enough liability to protect your assets. If you own a home, have significant savings, or could be sued, consider limits of at least 100/300/100. The premium difference between minimum limits and higher limits is often small — typically $50–$100 per year.
For a broader look at sizing your entire policy, see How Much Coverage Do I Need?.
What liability insurance costs
Liability-only policies are typically the cheapest auto insurance option, often ranging from $500 to $900 per year depending on your driving record, location, age, and the limits you choose. Adding collision and comprehensive roughly doubles that cost on average.
Frequently Asked Questions
- Is liability car insurance required?
- Yes. Almost every U.S. state requires drivers to carry a minimum level of liability insurance. Driving without it can result in fines, license suspension, and vehicle impoundment.
- What does liability insurance not cover?
- Liability does not cover your own vehicle's damage or your own medical bills. For those you need collision, comprehensive, and a medical coverage such as PIP or MedPay.
- What do liability limits like 25/50/25 mean?
- The three numbers are: bodily injury per person / bodily injury per accident / property damage per accident, all in thousands. So 25/50/25 means $25,000 per injured person, $50,000 total per accident, and $25,000 for property damage.
- Are state minimum limits enough?
- Often not. Minimum limits were set years ago and may not cover a serious accident today. If damages exceed your limits, you pay the difference personally. Many drivers carry 100/300/100 or higher.