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Updated January 20, 2023
Only two states — New Hampshire and Virginia — allow you to prove you have enough money to pay in the event of an auto accident. If you live anywhere else, state law will require you to buy liability insurance coverage.
Liability insurance is an excellent option for affordable coverage, but it’s important to know how far that coverage will extend while also considering what’s best for your personal situation. Many drivers feel the need to purchase additional comprehensive or collision coverage.
How does liability car insurance work?
Liability car insurance covers damage to the other person’s vehicle along with their medical costs if you cause an accident. You can’t use liability coverage to fix your own vehicle or pay your medical bills, but it reduces the burden of having to pay out of pocket for someone else’s accident-related expenses.
Without liability car insurance, the other person could take legal action against you to pay for their expenses. Also, you’d face penalties such as fines or a suspended license if you live in one of the states that require liability insurance. These states provide minimum coverage limits, but you can purchase additional coverage.
When you file a claim, your insurance company will pay up to your coverage limit minus your deductible. You’ll pay out of pocket for any expenses that exceed your coverage.
What does liability car insurance cover?
Liability insurance primarily covers costs for bodily injury and property damage, including the following expenses for the other driver in an accident you caused:
Emergency room visit after the accident
CT scan and other medical tests
Extended hospital stay
Vehicle and auto-body repairs
Vehicle replacement (if the car is totaled)
Damage to other property, such as a fence or phone pole
Most states use an at-fault judgment, which means if there’s an accident, both drivers’ insurance companies will determine who was responsible. Then, the at-fault driver needs to file a claim for insurance to cover the other person’s expenses from the damage.
In no-fault states, expenses are covered by each driver’s policy through personal injury protection (PIP) coverage.
See More: No-Fault Insurance
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What doesn’t liability car insurance cover?
Whether you’re at fault or not, liability insurance doesn’t cover damage to your vehicle or your medical expenses due to an accident. Comprehensive and collision insurance extend coverage to your own vehicle and medical expenses.
Ideally, when both drivers have liability coverage, their insurance will cover the other driver’s vehicle and medical expenses depending on who’s at fault. So if you’re not at fault and someone rear-ends you, for example, their insurance would cover you.
However, if the damage exceeds the coverage limit or you have additional expenses, like needing a rental car to get around while your vehicle is being fixed, liability coverage may not provide the best amount of coverage.
Likewise, if you hit an object such as a fence or mailbox, and damage your car, liability insurance won’t apply since you’d be at fault. Plus, there’s no other driver with insurance to cover your expenses.
Good to know
Liability insurance also won ’t help you if you’re hit by another driver who doesn’t have insurance or who has too little insurance. In those situations, uninsured or underinsured driver coverage would pay. But those coverages are typically optional, so you’ll have to choose them and pay a higher premium for them.
Types of liability auto insurance
Different types of liability insurance affect what your insurer will cover. Minimum requirements for liability insurance vary by state, so the following options may not be required in your state.
If the other driver faces injuries from an accident that you cause, your liability insurance will cover things like their emergency room visit, CT scan, or an extended hospital stay. It also covers lost wages and legal fees if the other driver decides to sue you for their injuries and the impact it left on them.
If your policy includes your family members, bodily injury liability coverage also applies to any damage they may cause to someone else while driving your vehicle.
This coverage operates with per-person and per-accident limits. This means, if multiple people in the other car (or even a pedestrian involved in the accident) need medical care, your bodily injury liability insurance can cover costs for each person up to your coverage limit. The per-accident limit applies to how much your insurer will cover overall in an accident.
In most cases, property damage in an accident occurs to the other person’s vehicle. Liability insurance covers the cost to repair or even replace their car if it’s totaled after the accident.
Property damage coverage also includes other structures such as a fence or phone pole, for example. The same per-person and per-accident limits apply for property damage coverage. This means, if you hit someone’s car which then damages a light pole, your insurance would cover repairs to both objects up to your coverage limit.
Personal injury protection (PIP)
Personal injury protection, or PIP, coverage covers medical expenses regardless of fault. No-fault states require PIP coverage, so both drivers must contact and file a claim with their insurance companies regardless of who caused the accident.
In the 1970s, some states proposed legislation to introduce no-fault insurance to reduce claim delays and the number of cases that went to court. Types of coverage and limits vary, but in most states, PIP covers medical fees, lost wages, and ongoing care for accident-related injuries. Some PIP policies also cover the cost of hiring a person to perform the essential services that someone injured in an accident cannot perform.
Medical insurance coverage, or Med Pay, is an auto insurance add-on that covers medical expenses for you and your passengers, even if you’re at fault. Specifically, this insurance covers costs for hospital visits and stays, doctor’s visits, health insurance deductibles, surgeries, and funeral expenses.
Some states that don’t offer Med Pay coverage require PIP instead, so depending on where you live, you’ll have one or the other. Compared to PIP coverage, Med Pay tends to be optional when offered and fails to cover lost wages and more. People might purchase this coverage to extend protection to their vehicle and medical expenses beyond basic liability coverage.
Uninsured or underinsured motorist insurance protects drivers involved in a hit-and-run or an accident with an uninsured or underinsured driver. Unfortunately, some drivers still decide not to purchase auto insurance even though it’s required. Or, they may not have enough coverage to pay for the damage they caused. Many states combine uninsured and underinsured motorist insurance into one policy.
Uninsured motorist insurance covers medical bills for both you and your passengers and damages to your vehicle. Some states may not cover damage due to a hit-and-run, so you’ll need to check with your insurer and consider purchasing comprehensive coverage.
See More: What is Uninsured Motorist Coverage?
State requirements for liability insurance
Depending on where you live, your minimum liability limits will vary because states set their own requirements for registered drivers. Find the minimum insurance requirements, as listed by the Insurance Information Institute, for your state in the table below. The split limit for Alabama, for example, is 20/50/25. The first number represents bodily injury per person, the second represents bodily injury per accident, and the final number represents property damage per accident.
|State||Minimum Liability Limits|
Additional auto insurance coverage
Liability coverage provides the minimum car insurance required, but other options with more coverage exist. Though liability coverage presents the cheapest option and protects you from paying out of pocket for the other driver’s medical and vehicle expenses, it offers little to no protection for your own medical costs and vehicle repairs.
Additional auto insurance coverage or a more comprehensive policy helps you avoid costly medical bills and medical collections, along with some money to repair or replace your car sooner. Find information about three other types of car insurance coverage options to consider below:
Collision: Collision insurance covers repairs to your car as a result of an accident with another vehicle or if your car hits an object such as a light pole or mailbox. Additionally, it covers damage to your car from potholes or if it flips over. Insurers sell collision coverage with a separate deductible and will reimburse you regardless of fault.
Comprehensive: Comprehensive coverage reimburses you for damage to your car caused by something other than a collision or loss due to theft. Insurers require drivers who finance their cars to have comprehensive coverage. It covers damages due to contact with an animal (such as accidentally hitting a deer on the road), fallen objects, broken windshields, and riots or vandalism.
Full coverage: Full coverage usually means you have comprehensive and collision insurance, along with anything else your state requires. Since most states require liability, full coverage indicates you have all three. When you finance a car, your lender usually requires you to have full-coverage car insurance.
Liability car insurance FAQs
Liability car insurance covers damage to another person’s vehicle and their medical costs from an accident you caused. If you get into an accident and are responsible, you’ll exchange insurance information with the other driver. Then, contact your insurance company to file a claim so your insurer can send a payment to the other driver. Most states require liability insurance and each state sets its own minimum coverage amount requirements.
No-fault states require drivers to file a claim with their insurance company regardless of fault. These states also require drivers to purchase PIP coverage in addition to their auto insurance policy. PIP coverage pays for medical expenses, lost wages, and related costs due to the aftermath of an accident.
At-fault states make the driver responsible for causing the accident use their insurance to cover the other driver’s vehicle damages and any medical expenses.
No, liability insurance only covers damages to the other person’s vehicle. Comprehensive and collision insurance do cover damages to your car. This additional coverage makes it worth purchasing on top of your state’s minimum required insurance, depending on your financial situation and insurance needs.
Split-limit car insurance policies present liability coverage by the following categories:
Bodily injury per person
Bodily injury per accident
Property damage per accident
For example, in Ohio, the liability coverage limit is 25/50/25. This means insurance will cover up to the following:
$25,000 for the other driver’s injuries
$50,000 in total for the other driver’s injuries as well as any of their passengers
$25,000 for damage to their vehicle
A combined limit merges everything so you have one limit for bodily injury and property damage. You can divide a combined limit up in any way to cover bodily injury or property damage after an accident instead of having separate limits.