What Is Liability Insurance Coverage?


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Key Takeaways

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In car insurance, liability coverage is mandatory in most states except New Hampshire.

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Liability coverage pays for third-party injuries and property damage up to your policy limits. Anything exceeding your limits is your responsibility.

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Liability insurance does not cover your injuries, damages to your vehicle or protection against uninsured or underinsured drivers.

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How Does Car Insurance Liability Coverage Work?

In car insurance, liability coverage pays for damages and injuries you cause to others in an at-fault accident. It typically includes bodily injury liability, which covers medical expenses, lost wages and property damage liability, which pays for damage to someone else’s vehicle or property.

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    Bodily Injury Liability

    Bodily injury liability in car insurance covers the medical expenses, lost wages and legal fees if you injure someone in an accident where you're at fault. It protects you financially by paying for the other party’s costs, not your own.

    • Emergency room visits and hospital stays
    • Surgery or physical therapy
    • Lost income from missed work
    • Legal defense fees if you're sued
    • Funeral costs if the accident is fatal
    • Pain and suffering damages awarded in court
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    Property Damage Liability

    Property damage liability covers the cost of repairing or replacing someone else’s property when you’re at fault in a car accident. It doesn’t cover your own vehicle or belongings, just the damage you cause to others.

    • Repairing another driver’s car
    • Replacing a totaled vehicle
    • Fixing a damaged fence, mailbox, or garage
    • Paying for damage to city property like traffic lights or road signs
    • Covering rental car costs for the other party while their car is being fixed
    • Legal fees if you're sued for property damage

How Liability Insurance Claims Work

Liability coverage in car insurance pays for injuries and property damage you cause to others in an at-fault accident. Understanding how the claims process works can help you respond quickly and avoid costly mistakes.

  1. 1

    Report the Accident to Your Car Insurance Company

    Contact your insurer immediately after the accident to start the liability claims process. Share key details like the time, location, people involved, and any police report number.

  2. 2

    Allow the Insurer to Investigate the Accident

    Your insurance company will assign a claims adjuster to determine fault. They’ll collect and review evidence, including photos, witness statements, and police reports.

  3. 3

    Confirm Fault and Liability Coverage

    If you’re found at fault, your liability insurance will apply up to your coverage limits. Your insurer will inform you of the total payout amount and what it covers.

  4. 4

    Let the Insurer Pay the Injured Party

    Your insurance company will send payment directly to the injured party or their insurer. Although you won’t receive the money yourself, it will be recorded as a liability claim under your policy.

  5. 5

    Prepare for Possible Premium Increases

    After a liability claim is filed, your insurance premium may go up at renewal. The amount depends on the claim size and your overall driving and claims history.

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WHAT HAPPENS IF YOU'RE SUED AFTER A CAR ACCIDENT?

If someone decides to sue you after an accident, your liability coverage provides legal defense up to your policy limits. Your insurance company assigns experienced attorneys to represent you and covers all court costs and legal fees. This protection can be worth hundreds of thousands of dollars in complex cases.

Your insurer has a strong incentive to defend you vigorously since they're ultimately responsible for paying any judgment up to your policy limits. They'll work to minimize both your exposure and their own financial liability.

Who Does Car Liability Insurance Cover?

Liability coverage in car insurance covers you, the policyholder, and in many cases, anyone driving your car with your permission. On the other hand, it doesn’t cover people driving your car without permission or using it for commercial purposes unless stated in the policy.

Who is covered: 

  • You (the primary policyholder)
  • Your spouse or partner if they’re listed on the policy
  • Family members in your household
  • Friends or others who have your permission to drive your car
     
     

Who isn’t covered:

  • Household members not listed on your policy
  • Drivers who use your car without your permission
  • Anyone using your car for business or delivery without proper coverage
  • People using your car for excluded uses (like racing or rideshare, unless added)

What Does Car Liability Coverage Not Cover?

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    Your Own Expenses

    Liability insurance never covers your medical bills and rehabilitation costs, repairs to your vehicle or replacement costs, rental car expenses while yours is being fixed, or lost wages if you can't work due to injuries. For protection against these costs, you need comprehensive and collision coverage.

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    Damage Above Policy Limits

    You're personally responsible for medical costs exceeding your per-person limit, total accident costs beyond your per-accident limit, property damage above your coverage amount, and legal judgments that surpass your total coverage.

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    Excluded Situations

    Most policies cover accidents in the United States and Canada, though international travel may require additional coverage. Coverage applies to accidents during your policy period, regardless of when claims are filed.

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    Policy Exclusions

    Liability coverage doesn't apply to intentional damage you cause, commercial use of your personal vehicle, racing or speed contests, damage while committing a crime, or using your car for rideshare without proper coverage.

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    Uninsured Driver Accidents

    If an uninsured driver hits you, liability insurance won't help. You need uninsured motorist coverage for protection.

How Much Liability Insurance Do I Need?

Most states require drivers to have auto insurance coverage, but only New Hampshire and Virginia don't. Although the minimum car insurance requirements vary by state, liability coverage is always part of it.

State
Bodily injury liability (per person)
Bodily injury liability (per accident)
Property damage liability (per accident)
Other car insurance requirements

Alabama

$25,000

$50,000

$25,000

None

Alaska

$50,000

$100,000

$25,000

None

Arizona

$25,000

$50,000

$15,000

None

Arkansas

$25,000

$50,000

$25,000

None

California

$30,000

$60,000

$15,000

None

Colorado

$25,000

$50,000

$15,000

None

Connecticut

$25,000

$50,000

$25,000

Uninsured/underinsured motorist bodily injury: $25,000 per person $50,000 per accident

Delaware

$25,000

$50,000

$10,000

Personal injury protection: $15,000 per person $30,000 per accident

District of Columbia

$25,000

$50,000

$10,000

Uninsured/underinsured motorist bodily injury: $25,000 per person $50,000 per accident Uninsured/underinsured property damage: $5,000 (subject to $200 deductible)

Florida

$10,000

$20,000

$10,000

Personal injury protection: $10,000

Who Needs More Than Minimum Car Liability Coverage?

Minimum liability insurance is the legal bare-bones requirement in most states — but it often isn’t enough to fully protect you in a serious accident. If the damages exceed your policy limits, you’ll have to pay the difference out of pocket.

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    High-Asset Individuals

    If your net worth exceeds $500,000, you’re more likely to be sued after a serious accident. Minimum liability insurance won’t cover large legal judgments, putting your savings, home or business at risk. Higher car liability insurance limits and umbrella coverage help protect your financial assets.

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    High-Risk Driving Situations

    Frequent highway driving or long commutes raise your chances of high-cost accidents. These situations often involve severe injuries and property damage that exceed minimum car liability insurance limits. Upgrading your liability coverage for car insurance offers stronger financial protection.

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    Households with Teen Drivers

    Teen drivers face accident rates nearly three times higher than experienced drivers, making them significant liability risks. Minimum liability coverage may not be enough to cover injuries or damages caused by inexperienced drivers. Higher car liability insurance limits can better protect your family from financial loss.

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    Multiple Vehicle Owners

    Owning multiple cars increases the chances of filing more than one liability claim. Standard car liability coverage may not stretch far enough in multi-claim situations. Higher limits help ensure you’re fully protected across all vehicles and drivers.

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    Business Vehicle Use

    Using your car for business exposes you to risks that personal auto insurance may not cover. If you cause an accident while working, basic car liability insurance might leave you with coverage gaps. Higher liability limits and business-use coverage help fill those gaps.

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    Urban Residents

    City driving means more accidents, higher medical bills and expensive repairs. Minimum car liability insurance may fall short in dense urban areas with complex claims. Boosting your liability coverage for car insurance helps protect you from big-city risks.

What Happens if Claims Exceed Your Coverage?

If liability claims exceed your car insurance coverage limits, you’re personally responsible for the remaining costs. This can include paying out of pocket for medical bills, property damage, or legal judgments. The injured party may pursue your savings, income, or other assets to recover the difference. Choosing higher liability coverage limits helps protect you from this financial risk.

How Much Does Liability Coverage Cost In Car Insurance?

Liability insurance costs vary dramatically by state due to different minimum requirements, accident rates, medical costs and legal environments. On average, a state-minimum liability-only car insurance policy costs $1,273 per year, but this average ranges from $653 to $1,708, depending on your state.

Hover over the map to see data for a state

Compare Liability Car Insurance Quotes

Comparing car insurance quotes is an excellent and convenient way to get the best deal possible. Securing an online estimate typically involves providing certain information, such as your ZIP code, age range, whether or not you currently have coverage, the number of vehicles you want to be insured, if you're a homeowner, your credit score range, any traffic incidents and whether or not you're a military member. If you're uncomfortable sharing personal details, you may request car insurance quotes anonymously.

MoneyGeek's calculator can also help you get quick quotes from multiple providers. Use this tool to get accurate estimates based on your needs.

Car Insurance Calculator

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$192
High
$139
Average
$87
Low

Rates updated:

Jul 15, 2025

Insurance Carrier
MoneyGeek Score
Average Monthly
Payment
1
Capital Insurance Group

Capital Insurance Group

94
/of 100
$87
2
GEICO

GEICO

82
/of 100
$109
3
83
/of 100
$118
4
83
/of 100
$129
5
79
/of 100
$133
6
77
/of 100
$151
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Factors That Affect Liability Coverage Cost

Your Driving Record

Age and Experience

Location and Geography

State Laws

Your Credit Score

Vehicle and Usage Factors

The Coverage Limits You Choose

Your Choice of Insurance Provider

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MONEYGEEK EXPERT TIP

Unless you can cover a catastrophic car accident with the money you have on hand, purchasing liability insurance is the best way to protect yourself against being sued over a car accident determined to be your fault. Even the necessary amount required by law might not be enough to protect yourself, but by shopping around and speaking to your insurance agent, you can find a cheap car insurance policy that meets your needs.

How to Save Money on Liability Insurance

Smart shopping and taking advantage of available discounts can significantly reduce your liability insurance costs without sacrificing protection.

  1. 1

    Start Shopping Early

    Start comparing rates two to four weeks before your current policy expires. This gives you adequate time to research options and make informed decisions without creating coverage gaps that could leave you liable for accidents.

  2. 2

    Get Multiple Quotes

    Based on national averages, liability-only premiums range from $653 to $1,708 annually, a $1,055 difference that makes shopping around essential for finding the best rates. That's a 61% difference between the cheapest and most expensive for identical coverage.

  3. 3

    Shop Regional Providers

    Don't overlook smaller regional insurers when shopping. These companies often offer competitive rates with more personalized service than large national carriers. They may also have different risk assessment models that work in your favor.

  4. 4

    Maximize Available Discounts

    • Bundle Home and Auto Policies: Combining auto and home or renters insurance typically saves 5% to 25% on both policies. Adding an umbrella policy often qualifies you for additional discounts while significantly increasing your liability protection.
    • Ask About Good Driver Discounts: Good students can earn 10 to 25% discounts by maintaining strong academic performance.
    • Ask about Good Driver and Defensive Driving Discounts: Clean driving records earn 10% to 30% discounts, while completing defensive driving courses can reduce premiums by 5% to 15%. Many insurers offer increasing discounts for accident-free periods, rewarding safe drivers with lower rates over time.
    • Ask About Safety Feature Discounts: Anti-lock brakes typically earn 5% discounts, while anti-theft systems can save 10% to 15%. Vehicles with top safety ratings often qualify for additional reductions since they're associated with fewer severe injuries in accidents.
    • Drive Less if Possible: Low annual mileage drivers often save 5% to 15% since less driving means lower accident exposure.
    • Ask About Organizational Membership Discounts: Professional memberships, alumni associations and employer groups frequently offer group discounts worth exploring.
    • Senior Citizen Discounts: Senior drivers can take advantage of mature driver discounts starting around age 50 to 55. Many insurers also offer discounts for completing senior driver refresher courses, which can help offset any age-related rate increases
  5. 5

    Maintain a Clean Driving Record

    Maintain a clean driving record to keep your car liability insurance rates low. Avoiding accidents, speeding tickets and serious violations like DUIs helps you qualify for the best rates and safe driver discounts. Even a single violation can raise your premiums for years.

  6. 6

    Pay Your Policy In Full

    Paying your car liability insurance annually instead of monthly helps you avoid installment fees.

  7. 7

    Consider 12-month terms

    Consider whether six-month or 12-month policy terms work better for your situation. Some insurers offer discounts for longer terms, while others may raise rates more gradually with shorter renewal periods.

What Is Liability Car Insurance Coverage: Bottom Line

Liability insurance refers to policies that only coverage bodily injury and property damage. In this article, we discussed what a liability-only policy covers, how it works and the average costs to help determine whether this coverage is enough for your needs. Drivers who prioritize cost may find liability car insurance attractive since it's usually the most affordable option. However, it also offers the least amount of protection.

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Ensure you're getting the best rate for your auto insurance. Compare quotes from the top insurance companies.

Why do we need ZIP code?

Liability Insurance Car: FAQ

MoneyGeek answers frequently asked questions about liability insurance below to help you make a decision about coverage and find a provider:

Does liability insurance cover my car if I am at fault?

I drive but don't own a car. Should I get liability insurance?

Is liability insurance required in every state?

Does liability insurance cover my own car?

What happens if I don't have enough liability coverage?

Can I get liability-only insurance?

How much liability coverage do I really need?

Does liability coverage have a deductible?

Will liability insurance cover me if I'm driving someone else's car?

How do liability limits work in multi-car accidents?

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Best Liability Car Insurance Rates: Our Methodology

MoneyGeek gathered and analyzed rates using a sample driver profile to determine company averages for the cost of liability-only insurance, how liability-only rates compare to full coverage rates and how rates may change for risky driver profiles (drivers with at-fault accidents and tickets).

Data Sources and Depth

We collected data from state insurance departments and Quadrant Information Services and analyzed 83,056 quotes from 46 companies across 473 ZIP codes.

Sample Driver Profile

To determine overall average annual car insurance rates, we used the following sample driver profile:

  • 40-year-old male driver
  • Driving a Toyota Camry LE
  • No on-record violations

We modified this sample profile by age, driving record and car make/model where specified to provide average rates for a variety of drivers.

Coverage Levels Explained

Rates collected were for policies meeting the minimum requirements in a given state or for increased liability coverage. Increased liability coverage refers to a policy with 50/100/50 liability limits, which is shorthand for the following:

  • $50,000 in bodily injury liability per person
  • $100,000 in bodily injury liability per accident
  • $50,000 in property damage liability per accident

You can choose how much liability coverage you want on either a liability-only or full coverage policy. The difference between liability-only and full coverage insurance is the addition of comprehensive and collision coverage. A liability-only policy does not include comprehensive and collision coverage.

Liability-Only Car Insurance: Related Pages

About Mark Fitzpatrick


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Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.


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