Liability car insurance is one of the most important forms of auto insurance. Nearly every state requires drivers to carry liability coverage, yet many motorists don’t fully understand what it is or why it’s required. This article will explain what liability car insurance is, what it covers, how much it costs, and why it’s so crucial for drivers to have.
What is Liability Car Insurance?
Liability car insurance provides financial protection for drivers who cause accidents that injure other people or damage their property. It helps pay for the other driver’s expenses, such as:
- Medical bills
- Lost wages
- Pain and suffering damages
- Car repairs or replacement
- Property repairs (buildings, fences, etc.)
Liability coverage is split into two main components:
Bodily Injury Liability
This covers injuries to other parties in an accident you cause. Bodily injury liability helps pay for expenses like:
- Ambulance fees
- Hospital bills
- Doctor visits
- Physical therapy
- Lost income
- Funeral costs
- Pain and suffering awards
Property Damage Liability
This covers damage you cause to other people’s vehicles or property. For example, property damage liability can pay for:
- Repairs to another driver’s car
- Replacement cost if their car is totaled
- Damage to buildings, fences, utility poles, etc.
- Damage to personal property in vehicles
Without liability insurance, you could be sued and held personally responsible for all these expenses. Liability coverage protects your finances in the event of an at-fault accident.
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Why is Liability Insurance Required?
Liability car insurance is mandatory in almost every state, with minimum coverage limits set by law. New Hampshire is currently the only state that doesn’t require liability auto insurance.
There are two main reasons liability coverage is mandated:
- It protects other drivers:Â If you cause an accident, liability insurance helps ensure the injured parties can get their medical bills and property repaired. This provides financial security for other motorists.
- It prevents uninsured drivers:Â Requiring liability coverage means almost all drivers carry it. This prevents uninsured drivers from causing accidents and leaving victims stuck with the bills.
Minimum liability limits are designed to cover basic accidents. However, many experts recommend buying more than the minimums to better protect your assets.
What Does Liability Insurance Not Cover?
Liability car insurance only covers damages and injuries for other parties – not you or your vehicle. Here are some things liability auto insurance does not pay for:
- Damage to your own car – For this, you need collision and comprehensive coverage
- Your medical bills after an accident – For this, you need medical payments, personal injury protection (PIP), or health insurance
- Injuries to passengers in your car – For this, you need medical payments, PIP, or health insurance
- Pain and suffering damages for you or family members
- Legal defense if you are sued – For this, you need umbrella insurance
This is why it’s often wise to add more coverages beyond liability minimums. Full coverage insurance provides more complete protection.
Liability Car Insurance Limits
Liability policies have limits on the payout amounts. Common liability limits are:
- $25,000 bodily injury per person
- $50,000 bodily injury per accident
- $25,000 property damage per accident
However, the specific numbers vary by state. Many states require:
- $15,000 bodily injury per person
- $30,000 bodily injury per accident
- $5,000 property damage per accident
Others may require $50,000/$100,000/$50,000 or higher limits. These numbers are your maximum payouts. Any costs above these limits must be paid out-of-pocket if you’re at-fault. That’s why higher liability limits are usually better.
How Much Liability Coverage Should You Have?
Most experts recommend buying liability limits equal to your net worth or assets. For example, if you have:
- $100,000 in savings
- $300,000 home
- $15,000 vehicle
You should consider liability limits of at least:
- $100,000 bodily injury per person
- $300,000 bodily injury per accident
- $15,000 property damage
This ensures you’re covered in a worst-case accident scenario. Lower limits could expose your assets to lawsuits or wage garnishment.
How Much Does Liability Insurance Cost?
Liability car insurance rates vary by state, age, driving history and other factors. However, the table below shows estimated average annual premiums for minimum liability coverage in each state:
State | Average Yearly Premium |
| Alabama | $516 |
| Alaska | $600 |
| Arizona | $729 |
| Arkansas | $531 |
| California | $815 |
Overall, U.S. drivers pay an average of $815 per year for minimum liability auto insurance. But again, costs range widely based on your personal profile. Comparing quotes from insurers is the best way to find cheap liability car insurance.
How to Get the Best Liability Insurance Rates
Here are some tips for getting the lowest liability insurance prices:
- Maintain a clean driving record – Avoid accidents, speeding tickets and DUIs.
- Ask about discounts – Take defensive driving courses, bundle policies, pay annually.
- Increase your credit score – Insurers may use your credit-based insurance score.
- Opt for a higher deductible – This can lower your rate significantly.
- Comparison shop – Get quotes from at least 3 insurers.
- Consider usage-based programs – These use a device to track driving habits.
Finding the right liability limits takes some thought. An independent insurance agent can help you determine adequate coverage. But remember, state minimums are usually not enough. Purchasing sufficient liability car insurance is key to protecting your finances from an at-fault accident.
Frequently Asked Questions about Liability Insurance
What is the difference between full coverage and liability only?
Full coverage insurance combines liability with other coverages like comprehensive and collision. Liability only covers injury/damage to others – not your car.
Does liability insurance cover all medical bills?
No, it only covers up to the limits you select. Excess medical costs would need to be covered by health insurance, settlements, or out-of-pocket.
Can someone sue me if I only have minimum liability insurance?
Yes, though they may only be able to collect up to your policy limits. Assets above that could be pursued. Higher liability limits reduce lawsuit exposure.
Is liability insurance required for parked cars?
Parked cars still need liability in most states. Your parked car could roll and hit something, for which you’d want liability protection.
Can I drive without insurance if I agree not to sue anyone?
No, liability insurance is required by law. Driving without it can lead to fines, suspended license, impounded car, etc.
How much liability coverage do I need for a financed car?
For a financed vehicle, lenders usually require 100/300/100 minimum liability limits, or higher. This protects their collateral.
Can I get liability insurance right after an accident?
In most cases, no. New policies don’t cover accidents that occur before the policy starts. You cannot add liability retroactively.
What happens if I’m sued for more than my liability limits?
You would be personally responsible for any amount awarded above your liability policy limits, which could mean wage garnishment or liens on your property.
