If you’re in a car accident, your auto insurance policy will cover some of the costs related to that accident.

Property damage liability insurance is an important part of the standard car insurance policy; it helps you pay for damage that your vehicle inflicted on someone else’s property.

Insurify helps you compare car insurance quotes no matter your insurance record or financial situation. Compare state minimum quotes, adjust coverage levels, and unlock discounts to find a rate that works for your budget and needs. 

Now, more on what property damage liability coverage means for your auto insurance plan…

What counts as property damage?

Property damage liability coverage doesn’t help pay for repairs to your own car; that’s the purview of your collision coverage. This coverage applies to damage to someone else’s car, however, as well as any other damaged property belonging to another person. If you run your car into a telephone pole or the side of someone else’s house, your property damage liability coverage kicks in for the costs of repairing that telephone pole or house.

How property damage liability coverage works

Most auto insurance policies have “split limit” liability coverage. That means the policy sets separate limits for each type of liability coveragebodily injury liability coverage per person, total bodily injury liability per accident, and property damage liability coverage per accident. Liability coverage is written in the form XX / XX / XX, and the number furthest to the right is your property damage liability coverage.

Depending on which state you live in, you may also have the option of getting “combined single limit” liability coverage in your car insurance policy, instead of split limit coverage. A combined single limit policy gives you a pool of liability coverage that you can split between different types of liability costs as you wish.

Whether you have split limit or combined single limit liability coverage, the amount applied to property damage liability is the maximum amount the insurance carrier will pay out per accident. For example, if you swerved to avoid a squirrel and managed to both hit your neighbor’s parked car and take out a portion of his fence, your property damage liability maximum would apply to the total joint cost of those repairs. But if you hit the neighbor’s car one day and drove into his fence on the following day, then your property damage liability maximum would apply to each individual set of repairs.

Choosing your property damage liability coverage limits

States that require residents to carry auto insurance typically also set minimum coverage limits for property damage liability. However, that doesn’t mean that this minimum amount is the right coverage limit for you…it just means you have to get at least that much coverage.

For example, California’s minimum required property damage liability coverage is $5,000. However, $5,000 won’t go very far in a major accident. If you total someone else’s vehicle worth $30,000 and your property damage coverage is only $5,000, you’d be responsible for paying the additional $25,000 worth of damage. California drivers should seriously consider getting car insurance policies with a higher property damage liability coverage limit than the required minimum. Increasing your property damage liability coverage limit generally does not have a huge impact on your auto insurance premiums.

You can use Insurify to see how much more a higher coverage limit would cost you per year. After filling out a couple minutes’ worth of personal and vehicle information, use the coverage level panel on your quote list to increase the liability coverage on the policies you want to compare. Select “EDIT COVERAGE” under the “Custom protection” button to change your property damage liability coverage levels. Your options will vary by state: 

This will generate a new set of insurance quotes to see how much the increased coverage would affect your rates. Most auto insurance companies will offer up to $100,000 in property damage liability coverage on a standard car insurance policy.

What if you need even more property damage liability coverage?

Drivers with significant bank balances or major assets will want to make sure they have lots of liability coverage. That’s because the more assets and money you have, the more attractive you’ll be as a target for lawsuits. Liability coverage can help cover the costs of a lawsuit arising from an auto accident.

If you feel that $100,000 in property damage liability coverage just isn’t enough given your financial situation, you can always pick up what’s called an umbrella policy to provide even more coverage. Umbrella insurance takes up where your auto insurance or home insurance policy lets off. These policies can provide as much as $2 million or more in total liability coverage, and are relatively inexpensive.

Let’s say that you manage to knock down someone’s house when you drive your car into it, resulting in $200,000 of property damage. If your auto insurance policy provides $100,000 of property damage liability coverage and you have a $1 million umbrella policy on top of that, then the auto insurance company would pay for the first $100,000 of property damage and the umbrella insurance company would pay for the remainder.

How to change your property damage liability coverage

Pull out your existing auto insurance policy documents and check to see how much property damage liability coverage you have. If that number looks puny, consider reaching out to your current auto insurance carrier or insurance agent and finding out how much it would cost to raise your maximum property damage liability limit.

Once you have a quote from your existing auto insurance company, use Insurify to get rates from other providers and make sure that you’re getting the best deal. You may find that raising your property damage liability coverage limit makes a different auto insurance provider a much better deal for you.

Even if you decide to stick with your existing carrier, raising your property damage liability coverage limit is extremely simple. Just give the insurance company a call and ask them to raise your limit. They can usually raise it right over the phone and will then send you a bill for the prorated increase in your premium. Once that’s done, you’ll have the comfort of knowing that you have adequate coverage to protect you in case of a serious accident.

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Updated April 29, 2021

Wendy Connick is the founder and owner of Connick Financial Solutions, a provider of tax and bookkeeping services and a QuickBooks Online Certified ProAdvisor. A long-time freelance writer, she specializes in business and finance articles on subjects including taxes, investing, and retirement. Wendy is an Enrolled Agent (EA), the only federally licensed tax practitioners who specialize in taxation and have unlimited rights to represent taxpayers before the IRS. She is a member of the National Association of Enrolled Agents and a certified volunteer for VITA (Volunteer Income Tax Assistance), an IRS-sponsored program to provide free tax help for low-income individuals and families.