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What is liability auto insurance?

Read the Spanish version: ¿Qué es un seguro automotor de responsabilidad civil?

Liability car insurance is a component of auto insurance that is required by nearly every state. Even in New Hampshire, which doesn’t explicitly require car insurance, you need to show proof of financial responsibility if you’re in an accident, and the easiest way to do that is with car insurance.

Liability auto insurance is divided into two parts: bodily injury liability (BI) and property damage liability (PD). These two parts work together to compensate others to whom you’ve caused harm with your vehicle, thereby protecting your assets.


What does auto liability insurance cover?

Am I required to carry liability insurance?

Understanding liability limits

Minimum liability limits

What are the recommended liability limits?

What happens if your limits are exceeded?

Split limits vs. Combined Single Limit

What does liability car insurance cost?

How much does it cost to increase my liability coverage?

What is not covered by auto liability?

What other kinds of coverages comprise an auto insurance policy?

What if I’m driving in another state with different requirements?

What if someone else is driving my car?

What is a “no-fault” law?

What is personal liability coverage?

Examples of auto liability accidents and claims


What does auto liability insurance cover?

Bodily injury liability coverage pays for others’ injuries or death in accidents where you are at fault. This covers the driver and passengers in another car, as well as any motorcyclist, bicyclist or pedestrian you harmed with your vehicle. Car insurance policy terms differ, but in general, BI covers up to your limits, for the following:

  • Medical expenses of an injured party
  • Funeral expenses of a fatality
  • Loss of income
  •  Pain and suffering

Property damage liability insurance covers damage to another person’s property from accidents that are your fault. Below are a few examples of property that could potentially be damaged:

  • Vehicles
  • Fence
  • Building
  • Fire hydrant
  • Guardrail
  • Pole
  • Landscaping

 Liability also covers legal defense in the event that you’re sued because of an auto accident.


Am I required to carry liability insurance?

Most states require you to carry liability car insurance, and those states that do not have compulsory auto insurance laws still have financial responsibility laws. These financial responsibility laws state you must be able to financially compensate someone to whom you cause harm while driving. In general, the simplest way to accomplish this is with car insurance.

In some states, you can acquire an alternative to liability in the form of a surety bond. The amount you must obtain varies by state. In Ohio, you need a bond of $30,000, and in Texas, it is $55,000. A surety bond requires you to incrementally pay a percentage of the total amount, and then you would owe the balance of the bond amount if you were in an accident. Buying car insurance, in comparison, is easier for most people – and isn’t the same risk to your savings.


Understanding liability limits

Liability insurance is broken down into three amounts: per person limit for bodily injury, per incident limit for bodily injury, and a property damage limit. Using example numbers, the limits are generally written as 25/50/25. Here’s how to read them:

  • First number 25 = $25,000 and is the maximum amount your bodily injury liability will pay for injury-related expenses per person.
  • Second number 50 = $50,000 and is the maximum amount that your bodily injury liability insurance will pay out for all injuries per incident.
  • Third number 25 = $25,000 and is the maximum amount that your property damage liability insurance will pay out for all property damage per incident.

Bodily injury maximum limits per incident are always higher than property damage since medical bills tend to add up much quicker than property damage expenses. 


Minimum liability limits

Liability insurance comes with limits that you choose when you begin your policy. The minimum liability limits that you can buy vary by state. You cannot buy less than your state’s minimum required by law, but you can buy higher liability limits. 

For example, Ohio’s minimum limits are written as 25/50/25. This breaks down to $25,000 worth of bodily injury coverage per person you injured, with a total of $50,000 for all injuries sustained in one accident (incident) and $25,000 worth of property damage liability for damages you caused to others’ car or property.

Beyond liability coverages, some states require that you purchase other types of coverages as part of your basic policy.  These extra coverages vary by state but many include: uninsured and/or underinsured motorist bodily injury coverage (UM or UMBI /UIM), uninsured motorist property damage (UMPD), personal injury protection (PIP) or Medical Payments (MedPay). 

  • UM bodily injury – Pays for your medical bills, up to your limit, if you’re injured by an at-fault, uninsured driver in an auto accident. 
  • UIM – Pays for your medical bills, up to your limit, if the at-fault driver is uninsured or doesn’t have sufficient coverage to pay for your medical expenses. 
  • UMPD – Pays for damages to your car, up to your limits, if your car is damaged by an at-fault, uninsured driver.
  • PIP and MedPay – Both are medical coverages that cover your injuries from an auto accident, up to your limits, regardless of who was at fault.

 You can find your state’s minimum car insurance requirements in the chart below:


Minimum auto insurance limits


Liability: 25/50/25


Liability: 50/100/25


Liability: 15/30/10


Liability: 25/50/25


Liability: 15/30/5


Liability: 25/50/15


Liability: 20/40/10 (effective Jan. 1, 2018: 25/50/25)
UM/UIM: 20/40


Liability: 25/50/10
PIP: 15/30

District of Columbia 

Liability: 25/50/10
UM: 25/50
UMPD: $5,000


Liability: 10/20/10
PIP: $10,000
BI liability not required by Florida but many carriers require 10/20


Liability: 25/50/25


Liability: 20/40/10
PIP or PPO: $10,000


Liability: 25/50/15


Liability: 25/50/20

UM/UM: 25/50


Liability: 25/50/10  (effective July 1, 2018: 25/50/25)


Liability: 20/40/15


Liability: 25/50/25
UM/UIM: 25/50
PIP: $4,500 medical/$900 work loss


Liability: 25/50/10 (effective Jan. 1, 2018: 25/50/25)
PIP: $10,000


Liability: 15/30/25


Liability: 50/100/25
UM/UIM: 50/100
MedPay: $2,000


Liability: 30/60/15
UM/UIM: 30/60
UMPD: $15,000
PIP $2,500


Liability: 20/40/5
UM/UIM: 20/40
PIP: $8,000


Liability: 20/40/10
PIP: Medical and work loss
PPI: $1,000,000


Liability: 30/60/10
UM/UIM: 25/50
PIP: $40,000


Liability: 25/50/25


Liability: 25/50/10
UM: 25/50


Liability: 25/50/20


Liability: 25/50/25
UM/UIM: 25/50


Liability: 15/30/10 (effective July 1, 2018: 25/50/20)

New Hampshire*

Liability: 25/50/25
UM/UIM: 25/50
MedPay: $1,000
*Insurance not mandatory in New Hampshire

New Jersey 

Liability: 15/30/5 (standard policy)
UM/UIM: 15/30
UMPD: $5,000
PIP: $15,000

New Mexico 

Liability: 25/50/10

New York

Liability: 25/50/10
UM: 25/50
PIP: $50,000

North Carolina 

Liability: 30/60/25
UM: 30/60
UMPD: $25,000

North Dakota 

Liability: 25/50/25
UM/UIM: 25/50
PIP: $30,000


Liability: 25/50/25


Liability: 25/50/25


Liability: 25/50/20
UM: 25/50
PIP: $15,000


Liability: 15/30/5
First party benefits (PIP): $5,000

Rhode Island

Liability: 25/50/25

South Carolina

Liability: 25/50/25
UM: 25/50
UMPD: $25,000

South Dakota 

Liability: 25/50/25
UM/UIM: 25/50


Liability: 25/50/15


Liability: 30/60/25


Liability: 25/65/15
PIP: $3,000


Liability: 25/50/10
UM/UIM: 50/100
UMPD: $10,000


Liability: 25/50/20
UM/UIM: 25/50
UMPD: $20,000


Liability: 25/50/10

West Virginia

Liability: 25/50/25
UM: 25/50
UMPD: $25,000


Liability: 25/50/10
UM: 25/50


Liability: 25/50/20


UMUninsured motorist
UIMUnderinsured motorist
UMPDUninsured motorist property damage
MedPayMedical Payments
PIPPersonal injury protection

What are the recommended liability limits?

Insurance experts recommend liability limits of 100/300/100. If you want the best protection available, that is usually 250/500/100, though a few auto insurers will allow drivers to pick coverage as high as 500/500/300. Higher limits mean you don’t put your assets at risk by having limits that could easily be surpassed if you’re at fault in an auto accident.


What happens if your limits are exceeded?

It’s wise to choose higher limits for your liability coverages to protect yourself, as you are personally responsible for expenses of the harmed party that exceed your limits. It’s better to pay a bit more for car insurance, if you can afford it, than to pay thousands or even hundreds of thousands of dollars  in medical bills, should someone you harm suffer severe injuries.

For example, California has minimum liability limits of 15/30/5. If you hit a car valued at $30,000 and total it while carrying only minimum limits, you would likely be personally responsible for paying $25,000, since your property damage coverage will pay out only $5,000.

If you severely injured the occupants of the other vehicle and their medical bills added up to $200,000, your limits would only cover $30,000 of that – leaving you to figure out how to pay the remaining $170,000 to the injured parties.

You may assume you won’t be sued if you have no assets to go after. However, assets or not, you may be sued, and in many states if a judgment is made against you in court, you need to pay or get a payment plan approved. Failure to do so can result in license and/or registration suspension, garnished wages, or, in some states, liens can be made against your real estate or personal property.


Split limits vs. Combined Single Limit

Limits such as 25/50/25 are called split limits because the limits are divided up by what will be paid out.  You can also buy a combined single limit (CSL) liability policy, though it’s not as common with a personal auto insurance policy. CSL policies are more common with commercial policies. 

With a CSL liability policy, you have one limit that is the maximum amount the auto insurer will pay for all liability claims resulting from one accident. 

For example, if you were in an accident in which you damaged a high-end car and injured two occupants, your $100,000 CSL policy coverage might look like this:

Damage to vehicle $50,000 + passenger medical bill $10,000 + driver medical bill $30,000 = $90,000 covered completely by your $100,000 CSL policy

If you were in the same accident but had split limits of 25/50/25, your policy would cover it like this:

Passenger’s injuries - $10,000

Driver’s injuries - $25,000 due to the max limit per person

Vehicle damage - $25,000 due to the max limit on property damage

 This would leave you personally responsible for $5,000 to the driver for injuries and another $25,000 toward the car’s repairs.

 The availability of combined single limit coverage depends on state laws and varies by insurance company. Many personal auto insurance companies only offer split limits. If CSL is available to you, the cost is normally higher, since the risk of paying out more using this method is higher to the car insurance company.


What does liability car insurance cost?

The types of coverage you choose, your limits, deductible amount, and multiple personal factors determine your total premium amount. The cheapest auto insurance will be for minimum liability. Here are common factors insurers consider when setting your rates:

  • Type of vehicle you drive
  • Use of vehicle use (personal or business)
  • Miles driven per year
  • Geographical location
  • Age
  • Years of driving experience
  • Driving record
  • Claims history
  • Marital status
  • Previous insurance coverage
  • Credit history (except in California, Hawaii, and Massachusetts)
  • Gender (except in Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania)

Insurers weigh the above risk factors differently, so make sure to shop around to find the car insurance company that has the best rate for your specific situation.

You can find the average rate for your state or car by using Insure.com’s interactive tools.

How much does it cost to increase my liability coverage?

It doesn’t cost double to double your liability limits. Insurers in some states will offer a substantial increase in liability coverage for less than a 10 percent increase in your annual premium. Instead of assuming you can only afford minimum limits, even if you’re a poor college student, check to see what it will cost to bump up your limits a little or a lot.

The chart below demonstrates the average cost per state of increasing liability coverage to 50/100/50 from the minimum state requirement. Keep in mind that the state requirement may also include personal injury protection, medical payments, uninsured/underinsured motorist and/or uninsured motorist property damage. For an average of $67 extra a year, you can decrease the chance of low limits leaving you personally responsible for thousands of dollars in claims after an accident.

Increasing Liability Limits by State

StateLiability Only - State Minimum BI/PDLiability Only - 50/100/50 BI/PD$ Difference% Difference
New Hampshire$587$629$427.1%
New Jersey$1,086$1,462$37634.6%
New Mexico$612$652$396.4%
New York$891$973$839.3%
North Carolina$385$426$4210.8%
North Dakota$512$527$152.9%
Rhode Island$1,026$1,113$878.5%
South Carolina$654$717$639.6%
South Dakota$431$467$368.3%
West Virginia$669$773$10315.4%
National average$713$780$679.4%

What is not covered by auto liability?

Liability does not cover you or your car in any way.

Bodily injury liability does not cover injuries to those in your vehicle, for that you need personal injury protection (PIP) or medical payments (MedPay) or health care coverage. If you have PIP or MedPay, this form of coverage would be primary to your health care insurance. If people in your car have a PIP car insurance policy of their own, it normally would be primary to your coverage.

Property damage liability coverage does not cover your vehicle.  If you want coverage for your vehicle, you need to add optional coverages of collision and comprehensive to your car insurance policy.

Auto insurance policies also contain specific exclusions to the liability coverage. Auto policies typically do not provide liability coverage for the following:

  • Intentionally causing injury or property damage
  • Property damage belonging to the insured (also referred to as household exclusion)
  • Property damage to property that is rented, used by, or in the care of the insured
  • Vehicles used in racing or speed contests
  • Vehicles not registered for public roads or designed primarily for off-road activities
  • Liability arising out of the ownership or operation of a vehicle being used for “livery conveyance” (i.e. transportation of goods or people for monetary compensation.  This includes taxi drivers and delivery services, even delivering newspapers or pizza can void your liability coverage)

Many auto insurance companies have added on an exclusion of coverage that is specific for driving for ridesharing drivers, like Uber or Lyft. If ridesharing drivers want coverage, they need to look for an insurer that offers an endorsement or special rideshare coverage.

The household exclusion keeps you from making a liability claim if someone in your household damages property owned by you or your household. 

For example, if a teenager backs his car into his mother’s car and then the mailbox, liability claims cannot be put in for any of the damage since the car and mailbox are property of the household. Mom and son would have to make collision claims – each with a deductible due – for the cars’ damages, and the family will have to pay for the damaged mailbox out of pocket.

Catastrophic incidents are typically excluded on an auto liability policy. This exclusion generally includes damage (bodily injury or property damage) resulting from:

  • Nuclear exposure or explosion (including the resulting fire, radiation, or contamination)
  • Bio-chemical exposure or attack
  • War (declared or undeclared)

What other kinds of coverages comprise an auto insurance policy?

The main component of an auto insurance policy is your liability coverage, since states require drivers/car owners to have a way to compensate those who they harm with a vehicle. Liability covers injuries or property damage to others that you cause.

Collision and comprehensive coverage – The two types of physical damage coverage that you can add to your policy to protect your vehicle. Collision covers damage to your car if it hits or is hit by another car or object. Comprehensive replaces stolen cars and covers damage to your car from fire, vandalism, and natural disasters.

Uninsured motorist and underinsured motorist coverage – Bodily injury coverage you can obtain, and is required in some states, that will help cover your medical expenses if you’re injured by a driver that has insufficient or no insurance.

Uninsured motorist property damage coverage – Required in a few states and available as optional coverage in a few other states, it helps cover repair costs if your vehicle is damaged by an uninsured motorist.  It typically has low limits, so collision is a better choice if you want better protection for your vehicle.

Personal injury protection and/or Medical Payments – Cover medical expenses that you and your passengers sustain in an auto accident. MedPay only pays for medical expenses, while PIP will often also cover loss of essential services, loss of income and funeral expenses. If you carry both together, you may be able to offset your PIP deductible by using your MedPay coverage.


What if I’m driving in another state with different requirements?

Most car insurance policies follow you out of state and also into Canada. United States auto policies, however, do not cover you in Mexico. You would need to buy a separate border policy or rider on your current policy that provides insurance coverage in Mexico.

Your liability insurance, as well as collision or comprehensive if you carry them, cover you under a “broadening clause.”  This provision allows your liability limits to be increased to match to the minimum limits of the state in which you are driving – if the limits happen to be above what you carry. 

If you have an accident while in another state, your normal limits will be compared to the coverage requirements of that state, and you’ll be covered for whichever amount is higher. If the state in which you’re driving requires different coverages than what you carry, such as personal injury protection (PIP), the typical policy will provide with that coverage for this unique situation. 

Some low-end policies do not extend coverage out of state or may only extend limits to the minimum limits of the state in which you’re driving, even if you have higher coverage in your home state. For this reason, read over your policy and contact your car insurance company if you have any questions about coverage before you take a road trip.

What if someone else is driving my car?

Liability insurance follows the car, not the driver. When you allow others to drive your car, you’re sending your insurance policy off with the car. If the friend crashes your car and claims are made, these claims are held against you and can raise your future rates.

Most car insurance policies will cover permissive drivers. These are drivers who have received your permission to operate your vehicle but not specifically listed on your policy. Not all policies allow this, some cheap polices are named “driver only” policies, meaning only those named have coverage under the policy, so best to double check your policy before loaning out your car.

If your friend or relative borrows your car and causes an accident, your liability insurance will be looked to for injuries or damages to others, and collision coverage, if you have it, would cover your car. If the driver of your car has his own insurance, it may be used as secondary coverage, so only if your policy limits are surpassed and his limits are higher than yours.

Personal injury protection (PIP) does follow the driver and then car. So, if both you and your friend carried PIP coverage, his would be primary for him.


What is a “no-fault” law?

“No-fault” refers to states that require drivers to carry personal injury protection (PIP) coverage as part of their car insurance. In no-fault states, PIP is primary coverage for medical expenses related to an auto accident. If you were injured in a no-fault state, you would use your own PIP coverage, instead of making a bodily injury claim through the at-fault party’s insurance, and your right to sue the at-fault driver for your injuries is limited.

These 12 states currently have no-fault car insurance laws in effect:

1.    Florida

2.    Hawaii

3.    Kansas

4.    Kentucky

5.    Massachusetts

6.    Michigan

7.    Minnesota

8.    New Jersey

9.    New York

10.  North Dakota

11.  Pennsylvania

12.  Utah

In three of these states – Kentucky, New Jersey, and Pennsylvania – you can choose no-fault coverage and limit your ability to sue after an accident or go with traditional tort laws that allow you to sue. These states are referred to as “choice” no-fault states.

No-fault does not mean that no one is held responsible for the auto accident. You can still make property damage liability claims against the at-fault party in no-fault states (though in Michigan, how much you can be compensated is limited because of its special no-fault and mini-tort laws).


What is personal liability coverage?

Even with high car insurance liability limits, the possibility remains they could be exceeded. Just imagine the expenses that could be racked up if you caused a serious, multi-car accident. For extra protection, you can purchase an umbrella policy that can give you extra liability coverage of $1 million or more.

Umbrella insurance kicks in after your primary insurance limits are reached, either for auto or home. For this type of coverage, you must normally have your car and homeowners insurance policy with the same insurance company and carry high limits, such as $300,000 for homeowners and 100/250 or 250/500 for bodily injury liability for car insurance.

For example, if you caused $750,000 worth of injuries to others in an auto accident and your maximum limit with your auto policy was $250,000, you’d be on the hook for $500,000. However, if you had an umbrella policy of $1 million, it would take over where your auto insurance stopped and pay the $500,000.

If you have a lot of assets to protect – a home, savings, etc. – obtaining an umbrella policy is wise. This excess liability coverage is typically cheap. The Insurance Information Institute estimates it costs between $150 to $300 per year for a $1 million policy, about $75 for another million dollars, and then $50 for every million after that.


Examples of auto liability accidents and claims

1.       You hydroplane on the freeway and rear-end a car that is then pushed into another car. You and the driver of the vehicle you hit choose to go to the hospital.             

Your property damage liability coverage will need to pay for the car you hit and the car that it was pushed into since you were the one negligent and responsible for the damages. Hopefully you have high enough property damage liability limits to pay for both cars, if not you can be looked at personally to pay for expenses that surpass your limits – unless you have an umbrella policy to use.

The injuries to the other driver could be claimed under your bodily injury liability coverage and your own injuries would be covered under personal injury protection (PIP) or medical payments (MedPay). This is unless you live in a no-fault state. In a no-fault state, each of you would claim injuries under your own PIP coverage.

Also, at your next renewal, expect your rates to increase due to a multi-car accident that has added both property and medical claims to your history.

2.       Your teen driver takes a corner too quickly and plows through a person’s yard. He takes out the fence, landscaping, and even the garden gnome.             

Your property damage liability coverage will pay, up to your limits, for the damage to the fence, landscape and the garden gnome. Your rates are likely to rise by 20 percent or more after an accident like this.

3.       Your car is stolen, and the thief crashes into a car at a stoplight and a row of parked cars before finally abandoning your car.              

Your car insurance liability policy doesn’t pay out for the damages caused by the thief. You didn’t give the person permission to operate your car. Since it was a person committing a criminal act, your insurer is not required to pay out for other people’s damages. For your car’s damages, you could make a claim under your comprehensive insurance since theft is covered. 

Comprehensive claims do not normally affect your rates since you cannot be held at fault for the way which the damage occurred.

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