Property damage liability insurance is a type of coverage that pays for damage to someone else’s property, such as their car or home, resulting from an accident caused by the policyholder. Property damage liability coverage is one of two types of liability insurance and is required in most states.
What Property Damage Liability Insurance Covers
- Damage to other cars caused by the policyholder’s vehicle.
- Damage to any structure or stationary object, including houses and fences, caused by the policyholder’s vehicle.
- An established maximum dollar amount of damage per accident.
Property damage liability insurance never covers damage to the policyholder’s own vehicle or property. In order to cover their own vehicle repairs, the policyholder would instead need to use collision or comprehensive coverage.
How Property Damage Liability Works
Liability insurance packages come in two varieties: combined single limit policies and split limit policies. In a combined single limit policy, your policy will offer a certain amount of coverage, and you can decide how to divide that coverage between bodily injury and property damage.
When it comes to split limit policies, however, your insurance company will decide how much it will pay out for each type of liability coverage. You will often see such policy packages described using a numeric shorthand like this:
Liability Insurance Coverage Notation: 25,000/50,000/20,000 or 25/50/20
While the first two numbers apply to bodily injury coverage, we’ll focus on the last, which applies to property damage liability coverage. In this example, this policy would pay up to $20,000 to repair damage to others’ property in an accident you caused. Let’s look at two scenarios.
Scenario 1: Minor damage
Let’s say you swerved to avoid a squirrel, hop the curb, and hit a neighbor’s fence, causing $5,000 in damage. Your policy would completely cover the cost to repair or replace the fence.
Scenario 2: Major damage
Let’s say you are driving on the highway when you lose control of your car and hit two vehicles, causing $5,000 damage to one car and totaling another car worth $20,000. Your policy would pay up to $20,000, but you would be responsible for the remaining $5,000 in damage.
How Much Property Damage Liability Do You Need?
Most states require drivers to carry at least a minimum amount of bodily injury and property damage liability insurance. The map below shows the minimum amount of property damage liability insurance that each state requires per accident.
Property Damage Liability Requirements by State
| State | Property Damage Liability Limit |
|---|---|
| Alabama | $25,000 |
| Alaska | $25,000 |
| Arizona | $15,000 |
| Arkansas | $25,000 |
| California | $5,000 |
| Colorado | $15,000 |
| Connecticut | $25,000 |
| Delaware | $10,000 |
| District of Columbia | $10,000 |
| Florida | $10,000 |
| Georgia | $25,000 |
| Hawaii | $10,000 |
| Idaho | $15,000 |
| Illinois | $20,000 |
| Indiana | $25,000 |
| Iowa | $15,000 |
| Kansas | $25,000 |
| Kentucky | $25,000 |
| Louisiana | $25,000 |
| Maine | $25,000 |
| Maryland | $15,000 |
| Massachusetts | $5,000 |
| Michigan | $10,000 |
| Minnesota | $10,000 |
| Mississippi | $25,000 |
| Missouri | $10,000 |
| Montana | $20,000 |
| Nebraska | $25,000 |
| Nevada | $20,000 |
| New Hampshire | $25,000 |
| New Jersey | $5,000 |
| New Mexico | $10,000 |
| New York | $10,000 |
| North Carolina | $25,000 |
| North Dakota | $25,000 |
| Ohio | $25,000 |
| Oklahoma | $25,000 |
| Oregon | $20,000 |
| Pennsylvania | $5,000 |
| Rhode Island | $25,000 |
| South Carolina | $25,000 |
| South Dakota | $25,000 |
| Tennessee | $15,000 |
| Texas | $25,000 |
| Utah | $15,000 |
| Vermont | $10,000 |
| Virginia | $20,000 |
| Washington | $10,000 |
| West Virginia | $25,000 |
| Wisconsin | $10,000 |
| Wyoming | $20,000 |
Minimum coverage requirements are per accident and last updated June 2021
Note that some states give you the option to forgo car insurance if you have enough assets to “self-insure.” In these states, you may have to deposit significant funds that could be used if you caused an accident, or post a bond. If you—like the vast majority of drivers—opt not to “self-insure,” then you are required to meet at least the minimums above.
How Much Does Property Damage Liability Insurance Cost?
In general, the cost of property damage liability insurance depends on how much you purchase. The higher your limits are, the more expensive your coverage is going to be.
The table below provides an example of the average additional cost drivers in Los Angeles may incur annually if they increase their property damage liability limits above a baseline of $10,000.
Added Annual Cost for Additional Coverage
| Property Damage Coverage Limits | From $10K to $25K | From $10K to $50K | From $10K to $100K |
|---|---|---|---|
| Driver with clean driving history | $88 | $114 | $141 |
| Driver with recent speeding ticket | $188 | $231 | $273 |
| Driver with recent accident | $146 | $182 | $210 |
Note: Average calculated from quotes by multiple insurance providers for a 37-year old female with excellent credit in zip code 90001 driving a 2008 Honda Accord.
*Monthly cost also includes $50,000/$100,000 bodily injury liability insurance and collision and comprehensive insurance with $500 deductibles.
How Much Property Damage Liability Insurance Should I Buy?
When purchasing property damage liability insurance, consider whether you can afford to purchase more coverage than is required by your state. Most state requirements for property damage liability are relatively low, and if property damage costs exceed those limits, you are financially liable for paying the remaining balance. In that case, the other party may sue you, putting your savings and assets at risk.
While the average property damage liability claim was $3,841 in 2018, according to the Insurance Services Office, your costs could spiral if you are found responsible for a major accident. We recommend that you buy the maximum amount of property damage coverage that you can afford. At the very least, you should purchase limits that are equal to your net worth, which will protect your assets if you’re sued. If your net worth is particularly high, you can supplement your property damage liability limits with a personal umbrella policy.
