Liability Car Insurance Guide, Requirements, & Quote Comparison
If you cause a car accident, liability insurance will cover injuries to other people and damage to their property. Liability car insurance, sometimes called "third party" coverage, is one of the most important types of car insurance. In fact, states typically require drivers to have a minimum amount of liability insurance coverage.
Liability auto insurance comes in two forms. One is bodily injury liability coverage, which covers all expenses related to physical injury to other parties. The other is property damage liability coverage, which pays for repairs to the victim’s damaged property, including a car or a house.
Most liability insurance policies have different coverage limits for bodily injuries and property damage, which will be expressed as three numbers. Take the illustration below of coverage limits:
25,000/50,000/20,000 or 25/50/20
Let’s break this down. The first two numbers deal with bodily injury coverage. One is the maximum that your insurance company would cover per person involved in the accident, and the second is the maximum coverage per accident for all of the injured parties. The third limit is your total property damage coverage.
So, in the above example, the insurance company would cover $25,000 per person for bodily injury claims. But if there were multiple people involved, the company would only cover up to $50,000 in bodily injury coverage for the entire accident. In addition, the insurance company would cover $20,000 in property damages. If there are costs incurred beyond these limits, the injured party could file a lawsuit for the remainder.
When you are at fault in an accident, liability insurance coverage does not pay for any damage to your own property, or your medical bills. So while important, it is not the only type of insurance you should consider. Collision coverage and personal injury protection insurance can help protect you and your property further in case of an accident.
Although minimum limits vary by state, states typically require you to have some amount of liability car insurance. While many people decide to purchase more than the minimum coverage, the first step is to make sure you have at least what is required by your state.Keep in mind that some states require you purchase additional kinds of insurance, in addition to liability coverage.
Minimum liability coverage limits(bodily injury per person/ bodily injury per accident/property damage per accident)
Other types of insurance required(if any)
|Connecticut||20/40/10||Uninsured/underinsured motorist coverage|
|Delaware||15/30/10||Personal injury protection(PIP)|
|District of Columbia||25/50/10||Uninsured motorist coverage|
|Florida||0/0/10||Personal injury protection(PIP)|
|Hawaii||20/40/10||Personal injury protection(PIP)|
|Illinois||20/40/15||Uninsured/underinsured motorist coverage|
|Kansas||25/50/10||Uninsured/underinsured motorist coverage, Personal injury protection(PIP)|
|Kentucky||25/50/10||Personal injury protection(PIP)|
|Maine||50/100/25||Uninsured motorist coverage, Medical payments coverage|
|Maryland||30/60/15||Uninsured motorist coverage, Personal injury protection(PIP)|
|Massachusetts||20/40/5||Uninsured motorist coverage, Personal injury protection(PIP)|
|Michigan||20/40/10||Personal injury protection (PIP), property protection|
|Minnesota||30/60/10||Uninsured/underinsured motorist coverage, Personal injury protection(PIP)|
|Missouri||25/50/10||Uninsured motorist coverage|
|Nebraska||25/50/25||Uninsured/underinsured motorist coverage|
|New Hampshire||25/50/25||Uninsured/underinsured motorist coverage, Medical payments coverage|
|New Jersey||15/30/5||Uninsured/underinsured motorist coverage, Personal injury protection(PIP)|
|New York||25/50/10||Uninsured/underinsured motorist coverage, Personal injury protection(PIP)|
|North Carolina||30/60/25||Uninsured/underinsured motorist coverage|
|North Dakota||25/50/25||Uninsured/underinsured motorist coverage, Personal injury protection(PIP)|
|Oregon||25/50/20||Uninsured motorist coverage, Personal injury protection(PIP)|
|Pennsylvania||15/30/5||Personal injury protection (PIP)—referred to as “First Party Benefits Coverage”|
|Rhode Island||25/50/25||Uninsured/underinsured motorist coverage|
|South Carolina||25/50/25||Uninsured motorist coverage|
|South Dakota||25/50/25||Uninsured/underinsured motorist coverage|
|Utah||25/65/15||Personal injury protection(PIP)|
|Vermont||25/50/10||Uninsured/underinsured motorist coverage|
|Virginia||25/50/20*||Uninsured/underinsured motorist coverage|
|Washington||25/50/10||Uninsured motorist coverage|
|West Virginia||20/40/10||Uninsured motorist coverage|
*Virginia drivers have the option to pay a $500 annual uninsured motor vehicle fee in lieu of obtaining liability insurance.
Your likelihood of causing an accidentand driving history
One of the most important factors impacting your insurance costs is your driving history and the extent to which you have had accidents or traffic violations in the past. In addition, you may be more at risk of having an accident due to some factors that have nothing to do with your driving skills. These include how much you drive and whether you drive in a densely populated area. If you feel that you are more likely to be in an accident because of these characteristics, you may want to get a higher amount of liability coverage.
The more assets you own, the more auto liability insurance you may need. If you own a home or have significant savings, an accident could be particularly damaging to your finances if the other driver decides to sue you. Conversely, if you do not have many assets, the other party will have fewer options for collecting on a successful lawsuit.
Consider the following example: Let’s say you are found to be at fault in an accident that causes serious damage and involves multiple cars. The total property damage comes to $135,000. Your policy covers just $30,000 in property damage, leaving a balance of $105,000. The other party can sue you for the remaining damages. And if the lawsuit is successful, you may be at risk of losing your home or a significant portion of your savings.
Special state programs for high-risk drivers
If you have serious driving violations on your record, you may have trouble finding a car insurance company that is willing to provide liability coverage—even the minimum required by your state. Many states have special programs for drivers who cannot obtain insurance through the private market because they are considered too high-risk to cover. Because insurance provided through these programs is very expensive, you should only use this option for liability insurance coverage as a last resort.
The bottom line
There is no right or wrong amount of liability insurance, as long as you obtain at least the minimum amount required by your state. The policy that is best for you will depend on many factors. However, keep in mind that higher levels of coverage are only marginally more expensive, and can save you serious money and hassle if you cause an accident. You can obtain comparison quotes from the WalletHub Car Insurance Quote Generator to get cheap liability car insurance and see how much your monthly cost will increase if you purchase additional coverage.
The example below shows how one driver’s insurance coverage only increases by less than $10 per month on average if she increases her coverage from 25/50/10 to 100/300/500.
|Liability coverage limits||25/50/10||50/100/25||100/300/500|
|Average monthly cost||$56.25||$60.25||$64.50|
Average of monthly quotes received from 8 major insurance companies for a 37-year old single female driver from zip code 94561. This driver is assumed to drive 12,000-15,000 miles annually and drives a 2008 Honda Accord LX.
Purchase as much auto liability insurance as you can afford. That way, you’ll have less to worry about – on and off the road.
Image: Robert Crum /Shutterstock
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