Complete Guide to Liability Coverage

First, let’s go over what liability coverage covers, and whether it’s enough coverage for all of your costs following an incident.

What It Covers

• Bodily injury liability: Liability coverage includes bodily injuries coverage, which will cover the other party’s bodily injury costs in an at-fault accident.
• Property damage liability: Property damage coverage will cover the cost of damages to the other party’s vehicle and/or personal property, including repairs or replacement of a vehicle.

What It Doesn’t Cover

• You and your passenger’s bodily injuries: If you lack medical payments coverage, you’ll have to pay out of pocket for injuries to you and your passengers in an accident you caused.
• Your property damage: You’ll have to pay for all of your own property damage costs if you don’t also have collision coverage. Liability coverage doesn’t include rolling car or potholes coverage either.
• Uninsured motorists: If you get into an accident with an uninsured or underinsured motorist and it’s their fault, liability coverage wouldn’t apply to your injuries or damages; you’d need uninsured motorist coverage as well.
• Lost wages: If you lack collision coverage, your car insurance company won’t reimburse you for wages you lost as a result of an at-fault accident.
• Damages from events other than collisions: Liability coverage doesn’t cover theft, vandalism, or damage from weather-related incidents. Rather, you’d need comprehensive coverage, which includes hail coverage and flood coverage.

How Liability Coverage Works

If you get into an at-fault accident, liability coverage would pay for the other party’s injuries and property damages up to the limit you’ve selected in your policy. For any costs above the limit, you’ll be responsible out of pocket.

Exceptions and Restrictions

Liability coverage has many exclusions, such as these:

• Accidents caused intentionally
• Accidents where you hit your own car or property
• Accidents with bodily injuries to a family member living in your house
• Ridesharing or any commercial driving (like if you’re driving to perform a work task for business owners)
• Catastrophic events like nuclear explosions or biochemical attacks
• Wear and tear
• Mechanical/electrical failure or breakdown
• Tire damage from roads
• Electronic or custom equipment that you (not the car manufacturer) installed
• Vehicles that have fewer than four wheels
• Vehicles that aren’t listed on your policy
• Vehicles that aren’t designed for public roads, like golf carts
• Vehicles you used to compete in or prepare for a race¹
• Punitive damages due to malicious acts, recklessness, or gross negligence²

On average, the annual cost of liability insurance is ​​$650.35 a year based on 2019 estimates by the National Association of Insurance Commissioners. See the averages by state below.

How much car insurance do you need? Well, it depends on what state you live in and your personal preferences.

Do You Need Liability Coverage?

The vast majority of states require liability coverage for all registered motor vehicles.

• Property damages: Every state except New Hampshire and Virginia require property damage coverage.
• Bodily injuries: Every state except New Hampshire, New Jersey, Florida, and Virginia require bodily injury coverage.

Beyond that, every state has different minimum coverage requirements in terms of limits. See how much liability coverage your state requires in our auto insurance guide.

Liability Coverage Limits

Just because you’ve met the minimum coverage your state requires doesn’t mean it’s sufficient. Here are the average minimum limits in the U.S.:

• Property damages: About $18,000
• Bodily injuries: About $26,000 per person or $52,000 per accident

Let’s look at the minimum car insurance in Florida, for example. When it comes to liability coverage, Florida requires property damage coverage only, with a minimum limit of $10,000⁵. This means that if you get into an accident and cause more than $10,000 worth of damages to the other party, you’ll be responsible for paying out of pocket.

If you want coverage beyond your liability limits, meet umbrella insurance. You can apply it to these areas:

• Property damage
• Bodily injuries
• Certain types of lawsuits if you’re sued for slender, false arrest, libel, etc.
• Personal liability

In other words, once you’ve reached your liability limits, umbrella coverage could kick in for added funds.⁶

At the end of the day, liability coverage only covers the other party’s injuries and damages, not your own. That’s why you’ll want to add comprehensive, collision, and medical payments coverage, at a minimum. We also recommend uninsured motorist coverage. For more information on liability insurance, see our FAQs below.