What Is Liability Car Insurance and What Does It Cover?

Liability car insurance — often called ‘minimum-coverage’ — is the least amount of car insurance coverage you can buy.

Jess Ullrich
Written byJess Ullrich
Jess Ullrich
Jess UllrichInsurance Writer

Jess is a personal finance writer who's been creating financial and business content for over a decade. Her work is published on Investopedia, MoneyWise, NextAdvisor, The HuffPost, and more. Prior to freelancing full-time, Jess was an editor at Investopedia, The Balance, and FinanceBuzz. Connect with her on LinkedIn.

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Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferSenior Editor

Chris is Insurify’s Senior Editor for home insurance. He’s a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more. He is passionate about breaking down complex subject material to make important information accessible to everyone. 

Chris began his career as a journalist, managing two weekly newspapers, then moving into marketing and content marketing roles. Before joining Insurify, Chris served as the content strategy manager at Siteimprove and as the content manager at Brandpoint, where he managed a team of content creators. 

Away from work, Chris is an active hockey player and proud father of two rambunctious little girls. Chris holds a Bachelor’s degree in English with a minor in mass communications from the University of Minnesota. 

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Updated June 1, 2023

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You’ve likely heard the term “liability insurance,” and you may have a vague idea of what it means. But maybe you don’t know exactly how it protects you and why it’s so important. This article is your guide to what liability insurance does and doesn’t cover, how it works, and why it’s an essential part of your auto policy.

Table of contents

What does liability car insurance cover?

Liability insurance protects you financially if you’re found at fault in an accident and the other driver or their passengers are injured, or their vehicle has damage. Here are some examples of what your liability car insurance may cover:

  • Emergency room visits

  • Medical tests

  • Physical therapy

  • Damage to other vehicles

  • Damage to a retaining wall, fence, or mailbox

  • Legal expenses if you’re sued as a result of the accident

The two major types of liability insurance are for bodily injury and property damage. Bodily injury coverage kicks in after an at-fault accident where the other driver or their passengers are injured. It can pay for their healthcare costs and your legal expenses associated with an accident-related lawsuit.

Property damage coverage protects you financially if you damage someone else’s property in a car accident you cause. This coverage pays for repairs and, like bodily injury, it can also pay for legal fees if you’re sued.

Every U.S. state except New Hampshire requires drivers to have at least a minimum amount of liability coverage. However, you’ll need liability if you choose to buy an auto policy in New Hampshire. Minimum liability insurance requirements vary by state.

For instance, Ohio requires $25,000 per person/$50,000 per accident in bodily injury and $25,000 in property damage liability insurance. But Massachusetts requires $20,000 per person/$40,000 per accident in bodily injury and $5,000 in property damage liability insurance.[1]

While liability insurance is an essential part of your car insurance policy, it doesn’t cover everything. Having a full-coverage policy with liability, collision, and comprehensive insurance provides more protection, and many lenders require all three if you’re financing your car through them.

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What is not covered by liability car insurance?

As mentioned, liability car insurance doesn’t cover everything. Here are some things it won’t cover:

  • Damage to your car in an accident you cause

  • Damage to your car due to a weather event

  • Vehicle theft

  • Healthcare bills for you or your passengers

Additional coverage types may protect you financially in these situations. Besides liability insurance, common coverage types include:

  • Collision: Collision insurance covers damage to your vehicle regardless of who’s responsible for an accident.

  • Comprehensive: Comprehensive insurance covers damage to your vehicle due to an event outside of your control, such as inclement weather, fire, burglary, and theft.

  • Personal injury protection (PIP): Sometimes referred to as no-fault insurance, PIP covers injuries and lost wages for you and your passengers, no matter who’s responsible for an accident.

  • Medical payments: Like PIP, medical payments, or MedPay, pays for medical costs for you and your passengers no matter who’s at fault. But this insurance doesn’t cover lost wages.

How liability car insurance works

Your vehicle’s liability coverage kicks in if you’re responsible for an accident and the other driver is injured or you damage someone else’s property. After the accident, you file a claim with your insurance company, which can pay up to your coverage limit. If the cost of medical expenses or property damage exceeds your coverage limits, you’ll pay the difference out of pocket.

Why is liability coverage important?

Liability coverage is essential for helping you meet most states’ minimum car insurance requirements, and it also protects you financially if you’re found responsible for an accident.

For instance, if you hit a car going through an intersection and the other driver is seriously injured, your liability coverage can offset the cost of their visit to the emergency room, medical testing, and more.

Likewise, if you’re sued after an at-fault accident, your liability coverage can help you pay legal fees. This could save you from financially devastating costs stemming from the incident.

Learn More: What Is a No-Fault State in Auto Insurance?

Learn More: What Is a No-Fault State in Auto Insurance?

How much does liability insurance cost?

The cost of liability insurance varies by your location, driving record, and other factors. But the average cost of liability coverage in the U.S. is around $170 per month, though the cost may be higher or lower depending on where you live. Drivers in California, for instance, pay around $161 per month for liability coverage, while Alabama drivers pay around $110 monthly.

State requirements for liability insurance

Just as insurance costs vary depending on where you live, so do required liability coverage levels. Different states have different requirements for registered drivers.

Liability coverage limits are divided into three categories, and you’ll often see coverage amounts expressed as 25/50/25. These figures represent $25,000 in bodily injury per person, $50,000 in bodily injury per accident, and $25,000 in property damage per accident.

Here’s a look at liability coverage requirements by state:

StateMinimum Liability Limits
Alabama20/50/25
Alaska50/100/25
Arizona25/50/15
Arkansas25/50/25
California15/30/5
Colorado25/50/15
Connecticut25/50/25
Delaware25/50/10
Florida10/10
Georgia25/50/25
Hawaii20/40/10
Idaho25/50/15
Illinois25/50/20
Indiana25/50/50
Iowa20/40/15
Kansas25/50/25
Kentucky25/50/25
Louisiana15/30/25
Maine50/100/25
Maryland30/60/15
Massachusetts20/40/5
Michigan20/40/10
Minnesota30/60/10
Mississippi25/50/25
Missouri25/50/10
Montana25/50/20
Nebraska25/50/25
Nevada25/50/20
New Hampshire25/50/25
New Jersey15/30/5
New Mexico25/50/10
New York25/50/10
North Carolina30/60/25
North Dakota25/50/25
Ohio25/50/25
Oklahoma25/50/25
Oregon25/50/20
Pennsylvania15/30/5
Rhode Island25/50/25
South Carolina25/50/25
South Dakota25/50/25
Tennessee25/50/15
Texas30/60/25
Utah25/65/15
Vermont25/50/10
Virginia30/60/20
Washington25/50/10
Washington, D.C.25/50/10
West Virginia25/50/25
Wisconsin25/50/10
Wyoming25/50/20
Table data sourced from real-time quotes from Insurify’s 50-plus partner insurance providers. Actual quotes may vary based on the policy buyer’s unique driver profile.

How much liability coverage do you need?

While you may decide to purchase only enough liability coverage to meet your state’s requirements, it’s also possible to increase your coverage limits. In many cases, opting for higher coverage limits can be a smart choice. Medical bills and legal expenses can be very costly and could easily exceed your state minimums for liability insurance.

When determining how much coverage you need, it can be helpful to look at your broader financial situation, including the value of your assets. Higher liability insurance limits could help shield your assets from potential litigation after an at-fault accident.

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Liability insurance FAQs

If you still have questions about auto liability insurance, you can find additional helpful information here.

  • What is the difference between liability and full-coverage insurance?

    Liability insurance is a component of a full-coverage auto insurance policy. Typically, full coverage includes collision, comprehensive, and liability insurance. Lenders often require borrowers to have a full-coverage auto policy when financing a vehicle.

  • What are the three types of car insurance?

    The three common types of car insurance are collision, comprehensive, and liability. Required coverages and coverage amounts vary by state, and other car insurance types also exist. For instance, you might need to purchase PIP or medical payments coverage depending on your state’s requirements.

  • What does liability insurance do for you?

    Liability insurance protects you if you’re found responsible for a car accident. It can pay for the other driver’s medical bills and those of their passengers. It may also pay for damage to the other vehicle involved in the crash. Additionally, it can protect you financially if you back your car into your neighbor’s fence or mailbox, covering their repair costs.

  • What is the limit of liability insurance?

    Liability auto insurance limits vary by insurer. For instance, one car insurance company may allow you to purchase up to $300,000 in bodily injury liability, while another may let you obtain $500,000 worth of coverage. If you’re interested in a high limit, compare options from different insurers to find the coverage you want.

    If you’ve purchased up to your insurer’s limit and would like additional protection, an umbrella policy could help. These policies provide coverage above and beyond your auto policy’s limits.

  • Does liability insurance cover your car if someone hits you?

    The other driver’s liability insurance may cover the cost of your car repairs if they’re found at fault in the accident. But your own liability insurance will not pay for damage to your vehicle; instead, it will only pay for damage you cause to other people and their property if you’re responsible for a crash.

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Sources

  1. Mass.gov. "Understanding Auto Insurance." Accessed May 26, 2023
Jess Ullrich
Jess UllrichInsurance Writer

Jess is a personal finance writer who's been creating financial and business content for over a decade. Her work is published on Investopedia, MoneyWise, NextAdvisor, The HuffPost, and more. Prior to freelancing full-time, Jess was an editor at Investopedia, The Balance, and FinanceBuzz. Connect with her on LinkedIn.

Learn More
Chris Schafer
Edited byChris SchaferSenior Editor
Chris Schafer
Chris SchaferSenior Editor

Chris is Insurify’s Senior Editor for home insurance. He’s a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more. He is passionate about breaking down complex subject material to make important information accessible to everyone. 

Chris began his career as a journalist, managing two weekly newspapers, then moving into marketing and content marketing roles. Before joining Insurify, Chris served as the content strategy manager at Siteimprove and as the content manager at Brandpoint, where he managed a team of content creators. 

Away from work, Chris is an active hockey player and proud father of two rambunctious little girls. Chris holds a Bachelor’s degree in English with a minor in mass communications from the University of Minnesota. 

Read Editorial Guidelines

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