Commercial liability auto insurance is a specific type of auto insurance for vehicles that are used for business-related purposes instead of personal uses. For example, a company car for a real estate agent or a company truck for a small construction business would be covered under a commercial liability auto insurance policy.
What Commercial Liability Auto Insurance Covers
Bodily injury liability
Property damage liability
Legal defense costs if the policyholder is sued after an accident
The numbers in liability insurance mean that an insurer will only pay for bodily injury or property damage liability claims up to a certain dollar amount. These policy limits are typically expressed as three numbers that each represent an amount in thousands of dollars, like 25/50/25. With a 25/50/25 policy, the insurance company will pay up to $25,000 per person for bodily injury claims and up to $50,000 in bodily injury claims per accident. Additionally, it will cover up to $25,000 in property damage for each accident.… read full answer
Every liability car insurance policy includes limits that are expressed with these numbers, and the order and notation are always the same. Once you know what the numbers in liability insurance mean, you can better understand how your own policy works.
What the Numbers in Liability Insurance Mean
1st Number: The maximum amount of bodily injury liability coverage per person.
2nd Number: The maximum amount of bodily injury liability coverage per accident.
3rd Number: The maximum amount of property damage liability coverage per accident.
Examples of Liability Insurance Limits
$25,000 in bodily injury liability insurance per person
$50,000 in bodily injury liability insurance per accident
$15,000 in property damage liability insurance per accident
$30,000 in bodily injury liability insurance per person
$60,000 in bodily injury liability insurance per accident
$10,000 in property damage liability insurance per accident
$50,000 in bodily injury liability insurance per person
$100,000 in bodily injury liability insurance per accident
$25,000 in property damage liability insurance per accident
It’s important to remember that these coverage limits only apply to other people’s expenses after an accident that you cause. If the cost of a bodily injury or property damage liability claim exceeds your policy limits, you can be left personally responsible for covering the remaining amount. As a result, you should purchase as much liability insurance as you can afford in order to protect your finances in case you cause a severe accident.
Liability car insurance costs an average of $716 per year nationally. The exact cost of a liability auto insurance policy varies based on several factors, including the state, insurance company, driver’s record, and amount of coverage purchased.
These sample quotes reflect minimum coverage requirements in California. The best companies should generally stay the same from state to state, though.
On average, liability car insurance costs 51% less per year than full coverage insurance, which usually includes liability along with collision and comprehensive coverage. Liability car insurance only covers expenses incurred by other people in accidents where the policyholder is at fault. Nearly every state requires drivers to carry it, though most states require other types of coverage as well.
Liability Car Insurance Costs by Coverage Level
Liability coverage limits
Average monthly cost
How much liability car insurance you purchase will be the main factor that influences your premium. Each state has its own coverage requirements, which can vary widely. For example, Alaska requires drivers to purchase $100,000 in bodily injury liability coverage per accident, while Arizona only requires $30,000.
Third-party liability insurance is insurance that pays when the policyholder injures another person or causes damage to another person’s property. In car insurance, third-party liability insurance is required in almost every state, and it only applies when the policyholder causes an accident. Third-party liability insurance does not pay for the policyholder’s own injuries or property damage.… read full answer
The Parties in Third-Party Liability Insurance
In third-party liability insurance, the first party is the policyholder and the second party is the insurance company. The third party is anyone else who becomes involved. Since liability means legal responsibility, third-party liability refers to the policyholder’s legal responsibility to someone else.
For example, say that Driver A accidentally rear-ends Driver B at a stop-light, causing minor damage to both cars’ bumpers. Driver B can file a claim with Driver A’s third-party liability coverage to pay for the damage. However, Driver A cannot file a claim with their own third-party insurance, since they are the first-party in this scenario. Instead, Driver A would need to have collision insurance for the damage to their own car to be covered.
Types of Third-Party Liability Car Insurance
Third-party liability car insurance incorporates two subsections: bodily injury and property damage liability. In addition, car insurance policies usually include three separate payout limits to cover different aspects of third-party liability. For instance, a policy written as 25/50/25 refers to limits of $25,000 for bodily injury claims per person, $50,000 for bodily injury claims per accident, and $25,000 for property damage claims.
Third-party liability car insurance is a term most frequently used outside the United States. In the U.S., insurance companies will usually just call it liability insurance instead.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by a WalletHub user. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.