Auto Insurance Liability Coverage 101






Most states in the US require drivers to have a minimum insurance policy to protect themselves both financially and legally, in the event of a collision. This mandated coverage is known as liability insurance.

Perhaps you just need a refresher course or maybe you’re not familiar with the definition of auto insurance liability coverage, but if you spend time behind the wheel, you need to know all about liability for your protection.

What is Auto Liability Coverage?

Auto liability insurance is made up of two components: property damage and bodily injury liability. These two branches of coverage are a fundamental part of an auto insurance policy. If the insured is determined to be at fault, the liability insurance provides coverage up to a certain designated amount.

In the event of an accident, if the liability policyholder is determined, at fault — the policy will cover damages to property and injury caused to other people in the accident, up to a certain designated amount. If the accident is determined to be the policyholder’s fault, property damage liability covers repairs (or replacements) to the other person’s vehicle, as well as, pay for any court costs within the policy limits, . In addition, bodily injury liability pays for funeral costs, medical bills (and also doctor visits and medications) for others who were involved in the accident.

Liability Insurance Limits

All insurance policies have a cap or a coverage limit that the insurance company will pay out for each individual accident. The coverage limit amount often lists property damage liability and bodily injury liability separately. Bodily injury has two separate coverage limits that is designated with two separate numbers. An example: 15,000/30,000 or 200,000/300,000. The first number refers to the maximum benefit per person, per accident while the second number refers to the maximum payout for all injuries, per accident. Property damage is denoted by a single number.

Many times, liability insurance limits are stated in the following manner: 25,000/45,000/15,000. The first and second numbers indicate the bodily injury limits and the third number indicates the property damage liability limits. Texas drivers, for instance, are required to have a minimum liability of at least 20/40/15. Therefore, those who operate a motor vehicle will need to have a minimum of $20,000 liability coverage for bodily injury with a maximum coverage limit of at least $40,000 and a property damage liability limit of at least $15,000. If Texan drivers are found without the state’s required coverage, they will face serious consequences.

State Requirements

The liability amount required varies according to the state, therefore, it is important to find out the coverage laws in your area, as well as, your state’s property and bodily injury liability requirements. For instance, California drivers are required to have a minimum of 15/30/5 in liability coverage. Failure to have the required amount of liability insurance can lead to undesirable consequences including fines, suspension of registration and/or license and also incarceration. 

Repair costs, medical bills and funeral costs can be expensive, which is why liability is required in most states. While liability coverage can seem expensive, the cost liability insurance offers no comparison to the high costs of driving without insurance. Liability insurance serves a purpose to protect drivers by ensuring they can be held financially responsible, in the event of a collision. Hopefully, you will not ever need liability coverage, but if you do, it is a good idea to get more liability than required by the state to ensure that your assets will be completely safe, in the event of an accident.


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