Updated
Purchasing the right auto insurance coverage is required by law and a smart move for drivers who wish to protect their assets. Liability car insurance is one of the most important types of insurance. Here's what drivers need to know about liability auto insurance and why it's so important.
What is liability car insurance?
If an insured driver causes an accident, liability car insurance covers the other driver's injuries and property damages resulting from the accident. A liability auto insurance policy covers the cost of medical expenses and lost wages of injured victims. And it can pay to repair or replace the victim's vehicle. A liability auto insurance policy will also pay for any legal bills resulting from the accident.
Liability car insurance only covers the damages claimed by the other driver -- not the policyholder. Insurance companies work together after a car accident to determine who is at fault. Sometimes a court decides if there's a dispute. The at-fault driver's insurer pays for losses for other parties, up to policy limits.
Liability vs. full coverage car insurance
Full coverage car insurance includes liability car insurance. But it also includes other types of car insurance coverage. The best full coverage car insurance policies may include:
- Collision coverage. This pays for damages to a policyholder's vehicle even if he's at fault for causing the crash or is involved in a single-car collision.
- Comprehensive coverage. This pays for non-accident-related damages. For example, an insurer would pay for repair or replacement of a stolen vehicle. Or the insurer would cover the costs of hail damage.
- Uninsured or underinsured motorist coverage. This pays for the policyholder's costs that should be covered by another driver who had insufficient insurance.
It's important to understand the difference between liability vs. full coverage car insurance. Liability car insurance protects others. Full coverage insurance protects other people and the policyholder.
What is covered under liability car insurance?
Liability car insurance covers losses a policyholder causes others. In many, but not all, states, it's common for drivers to be required to purchase a certain amount of liability auto insurance. For example, a state's minimum requirements might look like this:
- $25,000 per person and $50,000 per accident in bodily injury liability
- $15,000 per accident in property damage
This means the liability car insurance would pay for up to $25,000 in medical bills and lost wages for each injured victim. However, it would cover a maximum of $50,000 in damages for each accident regardless of the number of victims. It would also pay for up to $15,000 in property damage. If the policyholder was sued, liability car insurance also pays for legal bills.
What does liability insurance not cover?
Liability auto insurance does not cover any losses a policyholder personally experiences. It only pays for damages the insured driver causes to others.
Some examples of losses not paid for by liability only car insurance include:
- Damage to the policyholders motor vehicle in an accident, regardless of who was to blame
- The theft of the policyholder's car
- Damage to the policyholder's car if a tree falls on the vehicle
- Injuries the policyholder experiences in an accident caused by an uninsured driver
Liability insurance also covers accident victims if a policyholder crashes a rental car. But it won't pay for damages to the rental vehicle. Drivers renting cars should see what credit card rental auto insurance their cards provide. It may be important to purchase a collision damage waiver if it's not a cardholder benefit. That protects against losses to the rental car itself.
How much does liability insurance cost?
The cost of liability car insurance depends on many factors including:
- Past moving violations
- Previous accidents
- Driver age
Drivers at high risk of collisions will pay a higher liability car insurance cost.
Motorists looking for cheap liability car insurance coverage can take steps to reduce rates. This can include signing up for a defensive driving course. Some insurers also allow policyholders to download an app that monitors their driving. This can result in cheap liability car insurance due to premium discounts for safe behavior.
Liability car insurance costs by coverage level
Drivers who purchase more liability car insurance will pay higher premiums. That's because they transfer more risk to the insurance company.
A driver who buys only the state minimum coverage has very limited protection. Losses can quickly exceed coverage limits. That's especially true as at-fault drivers can incur legal bills and be held responsible for medical expenses, lost wages, and pain and suffering.
Paying extra premiums for additional coverage reduces the chance of the motorist being held personally responsible for losses exceeding coverage limits. Many drivers find this added protection is worth paying for.
Do you need liability car insurance?
In most states, liability auto insurance is required by law. That means every motorist must purchase liability car insurance coverage. Those who go without coverage risk fines and other potential legal penalties.
Many drivers find it makes sense to buy auto insurance liability coverage even if it isn't required. Without it, they would be fully responsible for covering all losses they cause to victims if they are responsible for a car crash.
How much liability insurance coverage do you need?
The right amount of liability car insurance depends on the level of asset protection necessary, as well as the local requirements.
It's crucial to purchase at least the state minimum. This varies by location, but most states require at least:
- $25,000 bodily injury per person
- $50,000 in bodily injury per accident
- $10,000 in property damage liability per crash
Drivers who want more protection should buy more than the minimum required liability car insurance coverage. Those with lots of assets to protect need to ensure they have enough insurance so that they aren't held personally liable for losses.
Liability auto insurance requirements by state
The table below shows the minimum liability auto insurance requirements by state:
| State | Bodily Injury Per Person / Bodily Injury Per Accident / Property Damage |
|---|---|
| Alabama | $25,000/ $50,000 / $25,000 |
| Alaska | $50,000/$100,000/$25,000 |
| Arizona | $25,000/$50,000/$15,000 |
| Arkansas | $25,000/$50,000/$25,000 |
| California | $15,000/$30,000/$5,000 |
| Colorado | $25,000/$50,000/$15,000 |
| Connecticut | $25,000/$50,000/$25,000 |
| Delaware | $25,000/$50,000/$10,000 |
| District of Columbia | $25,000/$50,000/$10,000 |
| Florida | NA/NA/$10,000 |
| Georgia | $25,000/$50,000/$25,000 |
| Hawaii | $20,000/$40,000/$10,000 |
| Idaho | $25,000/$50,000/$15,000 |
| Illinois | $25,000/$50,000/$20,000 |
| Indiana | $25,000/$50,000/$25,000 |
| Iowa | $20,000/$40,000/$15,000 |
| Kansas | $25,000/$50,000/$25,000 |
| Kentucky | $25,000/$50,000/$25,000 |
| Louisiana | $15,000/$30,000/$25,000 |
| Maine | $50,000/$100,000/$25,000 |
| Maryland | $30,000/$60,000/$15,000 |
| Massachusetts | $20,000/$40,000/$5,000 |
| Michigan | $50,000/$100,000/$10,000 |
| Minnesota | $30,000/$60,000/$10,000 |
| Mississippi | $25,000/$50,000/$25,000 |
| Missouri | $25,000/$50,000/$10,000 |
| Montana | $25,000/$50,000/$20,000 |
| Nebraska | $25,000/$50,000/$25,000 |
| Nevada | $25,000/$50,000/$20,000 |
| New Hampshire | $25,000 / $50,000 / $25,000 |
| New Jersey | $15,000/$30,000/$5,000 |
| New Mexico | $25,000/$50,000/$10,000 |
| New York | $25,000/$50,000/$10,000 |
| North Carolina | $30,000/$60,000/$25,000 |
| North Dakota | $25,000/$50,000/$25,000 |
| Ohio | $25,000/$50,000/$25,000 |
| Oklahoma | $25,000/$50,000/$25,000 |
| Oregon | $25,000/$50,000/$20,000 |
| Pennsylvania | $15,000/$30,000/$5,000 |
| Rhode Island | $25,000/$50,000/$25,000 |
| South Carolina | $25,000/$50,000/$25,000 |
| South Dakota | $25,000/$50,000/$25,000 |
| Tennessee | $25,000/$50,000/$15,000 |
| Texas | $30,000/$60,000/$25,000 |
| Utah | $25,000/$65,000/$15,000 |
| Vermont | $25,000/$50,000/$10,000 |
| Virginia | $25,000/$50,000/$20,000 |
| Washington | $25,000/$50,000/$10,000 |
| West Virginia | $25,000/$50,000/$25,000 |
| Wisconsin | $25,000/$50,000/$10,000 |
| Wyoming | $25,000/$50,000/$20,000 |
Data source: carinsurance.com.
How to find cheap liability car insurance
To find cheap liability car insurance, drivers should get quotes from multiple insurers. Shopping around enables motorists to find the best car insurance options for their situation. That's because some insurers charge more for drivers with specific profiles than others.
Many of the best companies for auto insurance also provide discounts for drivers who:
- Complete defensive driving courses
- Bundle coverage
- Have a safe driving record
- Compare car insurance rates for multiple companies
Motorists should ask insurers about opportunities to save so they can make sure their liability car insurance costs are as low as possible.
The Ascent's best car insurance companies
Check out our hand-picked list of the best car insurance companies. Our top picks are packed with valuable perks, such as low rates, bundled discounts, and best-in-class service.
FAQs
-
Liability car insurance doesn't provide coverage for a policyholder's car when someone else hits the vehicle. In most cases, the other driver would be held responsible for covering damages. If the other driver had insufficient insurance, uninsured or underinsured motorist coverage would pay for losses.
-
In some cases, automobile insurance premiums go up even for drivers who are not at fault. While some states prohibit this practice, a report from the Consumer Federation of America revealed prices rose as much as 10% in some cities even for innocent drivers involved in a crash.
-
Liability car insurance is part of full coverage auto insurance. Full coverage policies may include liability protection, collision coverage, comprehensive coverage, and uninsured or underinsured motorist coverage.
While it is less expensive to buy liability auto insurance only, the exact amount of savings varies depending on many factors including driving record, vehicle type, and vehicle safety features.
Drivers who choose to only have liability coverage take a big risk of major losses. Their insurer will not pay for their damages after a car accident or other incident affecting their vehicle.
-
Liability car insurance is necessary for many drivers because state law requires it. It also serves as a vital source of asset protection. Without liability insurance, a driver who causes a crash could be required to pay out of pocket for all personal injury and property damage losses victims experience.
-
Drivers may be covered by their standard auto insurance policy when renting a car. For motorists who do not have liability car insurance, buying coverage when renting a car may be important. This coverage protects against financial loss that could result from causing a crash in the rental car and injuring others or damaging their property.
Our Insurance Expert
Christy Bieber is a full-time personal finance and legal writer with more than a decade of experience. She has a JD from UCLA as well as a degree in English, Media and Communications with a Certificate in Business Management from the University of Rochester. In addition to writing for The Ascent and The Motley Fool, her work has also been featured regularly on MSN Money, CNBC, and USA Today. She also ghost writes textbooks, serves as a subject matter expert for online course design, and is a former college instructor.
Share This Page
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Citigroup is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has positions in Citigroup. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.