Property damage liability in car insurance covers expenses when you accidentally damage another person's property, such as cars or buildings. It's a standard part of auto policies and is mandatory in most states, but it doesn't cover damage to your own vehicle. If damages exceed your coverage limit, you pay the difference, and your premiums may increase after an accident.
What Is Property Damage Liability in Car Insurance?
Updated: May 20, 2024
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Key Takeaways
Property damage liability is a fundamental part of car insurance, covering damage you cause to someone else's property, but not your own vehicle.
If you're at fault in an accident, this insurance pays for the other party's repairs, within your policy's limits.
To cover your own car's repairs in accidents or other incidents like theft, you need collision and comprehensive insurance.
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What Is Property Damage Liability?
Property damage liability in car insurance covers the costs if you are at fault for accidentally damaging someone else's property with your vehicle. This includes other vehicles, buildings, fences and more but does not cover damage to your own car.
The last number in your policy limit's sequence represents your property damage liability limit. For example, in a 100/300/100 policy, you have up to $100,000 in coverage for property damage in each accident.
When choosing liability coverage, the options typically include the following:
- State minimum liability coverage: The basic, legally required coverage in your state.
- 50/100/50: Offers property damage protection up to $50,000 per accident.
- 100/300/100: Increases your coverage to $100,000 for property damage per accident.
- 300/500/300: Provides a comprehensive $300,000 in property damage coverage per accident. While not rare, it's more typical among drivers who opt for higher-than-average liability coverage due to their higher risk exposure or desire for more comprehensive financial protection.
To cover damages to your own vehicle, you'll need collision insurance, which pays for damage to your car from a collision, regardless of who is at fault. Comprehensive insurance covers non-collision-related damage to your car, such as theft, vandalism or natural disasters.
What Property Damage Liability Covers
Property damage liability in car insurance is designed to cover the costs of damage that you, as the driver, might cause to someone else's property with your vehicle. This coverage is a standard part of most auto insurance policies and is mandatory in many states.
It's important to note that this coverage does not extend to any damage to your own vehicle.
Types of Property Damage Claims
Damage to Other Vehicles
If you're at fault in a collision that damages another person's car, your property damage liability coverage will pay for the repairs to that vehicle.
Damage to Buildings and Structures
If an at-fault accident damages buildings, homes, storefronts or other structures, property damage liability will cover the repair costs. This includes scenarios like accidentally driving into a garage door or a business facade.
Damage to Stationary Objects
This covers damage to objects like street lamps, traffic signs, mailboxes or fences. If you hit any of these objects with your car, your insurance can cover the costs of repairing or replacing them.
Legal Costs
In some cases, if the property damage leads to legal action against you, your property damage liability may cover the legal expenses associated with defending yourself in court.
Landscaping and Personal Property
This can include damage to someone's yard, garden or personal items that were on their property, like bicycles or outdoor furniture.
If you’re looking to get insurance to cover your own vehicle, add collision insurance on top of your liability coverage. Here's how the two types of coverage compare:
Aspect | Property Damage Liability | Collision Insurance |
|---|---|---|
What It Covers | Damages to someone else's property (like their car, fence or building) caused by your vehicle | Damages to your own vehicle from a collision, regardless of who is at fault |
Required/Optional | Required in most states (except New Hampshire and Virginia) | Optional coverage that can be added to your insurance policy |
Deductible | No deductible | Typically has a deductible that you pay out of pocket before coverage kicks in |
Policy Limits | Has a maximum limit that the insurance will pay for damages | Coverage limit is usually based on the value of your vehicle |
Claim Filing | The other party typically files a claim against your policy | You file a claim with your own insurance company |
How Property Damage Liability Works
Property damage liability is essential in car insurance, covering a specified amount for each accident without requiring a deductible.
If you accidentally damage someone's property with your car, they'll file a claim with your insurance. Your insurance pays for the repairs, but only up to your policy's limit. If the repair costs exceed your limit, you'll have to foot the bill for the extra amount.
If you have another accident, your insurance steps in again with the same limit. Say your limit is $10,000 per accident; it'll cover up to that amount each time. But remember, after an accident, your insurance cost might go up. In fact, the average cost of car insurance can jump by 67% after an accident.
In some states, if your policy has a combined single limit, your insurance covers injuries and property damage under one total limit. This gives you a bit more flexibility when dealing with different kinds of claims.
How Much Property Damage Liability You Need
Most states require property damage liability insurance — the exceptions are New Hampshire and Virginia. Liability insurance automatically includes both bodily injury and property damage liability, regardless of the policy limits or if you choose the state minimum coverage.
The National Safety Council reports that the average property damage in an accident is about $5,700. The right amount of coverage for you depends on your budget, your risk tolerance and the risks you might face. Typically, state minimums don't cover the full extent of property damage, especially in accidents involving high-value vehicles. For example, if you're in an accident with a luxury car, a lower limit might not fully protect you financially.
In choosing your coverage, weigh the potential accident costs against your policy limit. A higher limit offers more protection and can prevent significant out-of-pocket expenses in the event of a serious accident.
WHAT HAPPENS IF YOU GET IN AN ACCIDENT WITH A LUXURY CAR?
Let's consider a scenario where you're driving with state minimum liability insurance, and your state's minimum property damage liability coverage is $25,000. You're involved in an accident with a Ferrari. The repair costs for a Ferrari, given its luxury status and specialized components, can be extremely high. If the damage to the Ferrari totals $100,000, your minimum coverage of $25,000 would fall significantly short. In this case, you would be responsible for the remaining $75,000. This example highlights the potential financial risk when minimum liability limits are insufficient to cover damages to high-end vehicles.
How Much Property Damage Liability Costs
The average cost of liability insurance, which includes both bodily injury and property damage, is as follows:
- For basic state minimum liability: $41 per month, $489 per year
- For 100/300/100 liability coverage: $51 per month, $615 per year
- For 300/500/300 liability coverage: $60 per month, $723 per year
The average premiums are based on rates for a 40-year-old male with a Toyota Camry.
You can get higher coverage by increasing your monthly cost by $10 to $19. Higher limits can safeguard you against large out-of-pocket expenses in the event of an accident, especially if the damages exceed state minimum coverage levels.
| State Minimum Liability Only | Annual Premium$489 | Monthly Premium$41 |
| 100/300/100 Liability Only | Annual Premium$615 | Monthly Premium$51 |
| 300/500/300 Liability Only | Annual Premium$723 | Monthly Premium$60 |
How to File a Property Damage Claim
If you're in an accident and need to file a claim against the other driver's insurance, start by documenting the damage with photos and gathering any eyewitness accounts. If you have a pre-accident photo of your property, keep it for comparison. Exchange insurance information with the other driver and promptly contact their insurance company. Ensure that the settlement you receive is fair and covers all your repair bills.
1
Document the damage
Right after the incident, take detailed photos of the damage. If there are witnesses, get their contact details.
2
Exchange information
Swap contact and insurance details with the at-fault driver, including their insurance company name and policy number.
3
Report the incident
As soon as possible, contact the at-fault driver's insurance company to report the accident.
4
Provide details of the incident
When reporting, give a clear account of the accident and the damage, including the date, time and location.
5
Submit a claim form
Fill out the claim form provided by the insurance company with accurate and detailed information about the incident and damage. An adjuster will be assigned to assess the damage. They will review the claim, inspect the damage and estimate repair costs.
6
Get repair estimates
Obtain repair estimates from reputable sources to understand the potential repair costs.
7
Review the settlement offer
Carefully evaluate the settlement offer from the insurance company to ensure it covers the necessary repair costs.
8
Finalize the claim
If the offer is satisfactory, finalize the claim. The insurance company will then arrange payment for the repairs.
FAQ About Property Damage Liability
MoneyGeek addresses commonly asked questions about property damage claims to help you understand this essential coverage, how it works and what it means for you as a driver.
What is property damage in car insurance?
Property damage in car insurance refers to coverage that pays for damage you cause to someone else's property with your vehicle, such as another car, a fence or a building.
Who pays for property damage in a car accident?
The driver at fault is responsible for paying for property damage in a car accident. This is typically covered by their property damage liability insurance.
Does property damage include damage to your car?
No, property damage liability does not cover damage to your own car. It pays for damage to other people's property. For your own car's damages, you would need collision or comprehensive insurance, depending on the situation. And in a no-fault state, each driver’s insurance foots the bill regardless of who caused the accident.
What happens when property damage exceeds your policy limits?
If property damage exceeds your policy limits, you are personally responsible for paying the excess amount.
What is the difference between property damage and collision?
Property damage liability covers damage you cause to someone else's property, while collision coverage pays for damage to your own vehicle from a collision, regardless of who is at fault. Collision coverage typically requires a deductible and is optional, whereas property damage liability is usually mandatory.
About Mark Fitzpatrick
Mark Fitzpatrick has analyzed the property and casualty insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. Currently, he leads P&C insurance content production at MoneyGeek. Fitzpatrick has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.
Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.
sources
- National Safety Council. "Guide to Calculating Costs." Accessed November 14, 2023.