Liability Car Insurance: What It Covers and How Much It Costs

Advertising & Editorial Disclosure
Last Updated: 11/1/2022
Written By     |  
Reviewed By     |  

Liability auto insurance is the best way to protect yourself against substantial financial loss in the event of a car accident where you're at fault. Nobody likes to think about something like this happening, but when you're faced with a serious car accident, the last thing you want to have to worry about is if there will be enough money or car insurance to cover injuries and damages.

Insurance Rates

Compare Auto Insurance Rates

Ensure you are getting the best rate for your car insurance. Compare quotes from the top insurance companies.

This is an icon


Why Trust MoneyGeek? MoneyGeek collected data from state departments of insurance and Quadrant Information Services to determine the average cost of car insurance for a liability-only policy compared to the average cost of a policy that includes comprehensive and collision coverage.


Quotes Analyzed


Companies Compared


Zip Codes

What Is Liability Car Insurance and What Does It Cover?

Liability insurance covers the driver of another vehicle if you are in an accident that is your fault. It doesn't cover you, your injuries or your car. Still, it can help protect you from being personally sued if you have purchased enough liability insurance to cover the other party's losses.

Liability insurance is required in every state except New Hampshire. If you are hit by someone else, and it's their fault, their liability insurance will cover damage to your car and your medical bills. There are two types of liability insurance:

Bodily Injury Liability

Bodily injury liability covers the driver and occupants of the other car if you cause an at-fault accident resulting in injuries. It does not cover injuries you or your passengers sustain in the accident. Bodily injury liability covers medical bills, pain and suffering and wages lost by the other person as a result of not being able to work while recovering from injuries.

Property Damage Liability

Property damage liability insurance covers damage to the other person's property, usually their car, but it can include items inside the vehicle. If you drive into a building, property damage liability will cover the damage to the building up to the policy's limit. You'll need both types of liability insurance to protect yourself.

The Liability Insurance Formula

Liability insurance limit amounts are given as three numbers separated by slash marks, for example, 50/100/50.

In this case, the first 50 means $50,000 and refers to the amount of bodily injury coverage per person covered by the policy. The 100 means $100,000 of bodily injury coverage per accident. The last 50 refers to the amount of property damage liability per accident, which would also be $50,000.

Keep in mind that bodily injury liability is per person, while property damage liability is per accident. If you hit three people and three cars in the same accident, your insurance will cover you for up to $100,000 for the bodily injuries of the people you hit ($100,000 maximum) and only up to $50,000 for all three of the cars. In this scenario, you would probably max out the policy, and you would be held liable and possibly sued for any remaining bills.

50/100/50 Insurance Explained

  • Limit
  • 50
    $50,000 in bodily injury liability coverage per person
  • 100
    $100,000 in bodily injury coverage per incident
  • 50
    $50,000 in property damage liability per incident

What Is the Cost of Liability Auto Insurance?

The average cost of liability coverage for a 50/100/50 policy is $864. If you upgrade to full coverage, including collision and comprehensive, the average cost is $1,270, or an increase of 31.98%.

However, if you add collision and comprehensive insurance to your policy, you and your vehicle will be covered in an accident if you're at fault. This makes the extra cost of the insurance worth it to most people. Collision will cover damage that occurs from hitting something, and comprehensive covers damages from theft, weather, animals (such as hitting a deer) and vandalism. If you have a loan on your vehicle, the finance company will require you to carry collision and comprehensive insurance.

Average Annual Cost of Liability Coverage

50/100/50 Liability Only
50/100/50 Comprehensive Collision
% Decrease of Liability vs. Full Coverage

























State Farm












Do I Need Liability Coverage and What Is the Minimum Requirement?

States vary in how much liability coverage they require, with most states requiring at least $15,000 in bodily injury coverage per person, $30,000 in bodily injury per accident, and at least $10,000 in property damage. The policy would read 15/30/10. Some states also require uninsured motorist coverage (UM), underinsured motorist coverage (UIM) and personal injury protection (PIP).

No matter your state's requirements, you need to have liability insurance or very deep pockets, as it's against the law in most states to drive without liability coverage. New Hampshire doesn't require liability insurance, but they do require drivers to prove they have some means of financial responsibility if they cause an accident.

How Much Liability Insurance Should You Buy?

State minimum requirements for liability insurance may not be enough to cover you if you cause an accident. You will have to pay for anything that is not covered by liability insurance, and medical bills can skyrocket very quickly.

Using Your Liability Insurance

This example illustrates how liability insurance is used and how not having enough liability insurance may lead to you paying out-of-pocket costs.

Susan is driving home from work and hits another vehicle. The other car is driven by a couple, Dan and Amy, with their child, Allison, in the back.

Susan has 50/100/50 in liability insurance.

  • Dan injures his back, and his medical bills total $30,000.
  • Amy breaks an arm and suffers internal injuries. Her medical bills cost $45,000.
  • Allison breaks a leg, and her medical bills cost $7,000.

This scenario is covered by Susan's plan because all three people's injuries total $82,000, and Susan is covered for up to $100,000 per accident.

As a comparison, imagine there's a fourth person in the car, Tony, and Tony's medical bills total $40,000. Susan would then be on the hook to pay the extra $22,000 not covered by her liability insurance.

This also assumes no one in the car Susan hits sues her for lost wages or pain and suffering. Medical expenses add up quickly and can easily bankrupt you.

What Is Not Covered by Liability Insurance?

Liability insurance is pretty bare bones. It doesn't cover options such as:

  • Collision (damage to your own vehicle).
  • Comprehensive (damage to your own car in anything other than an accident with another car).
  • Uninsured motorist coverage (protects you if someone with no insurance hits you).
  • Underinsured motorist coverage (covers you if you're hit by someone who doesn't have enough insurance).
  • Personal injury protection (things like medical expenses and lost wages).

Liability Insurance Frequently Asked Questions

Because liability insurance is required in 49 states, many questions arise about it and what it covers. Below are some of the most frequently asked questions about liability insurance.

Insurance Rates

Compare Auto Insurance Rates

Ensure you are getting the best rate for your car insurance. Compare quotes from the top insurance companies.


About the Author


Gail Kellner is a professional financial writer who specializes in life insurance, auto insurance and personal finance. She earned her Bachelor's degree in Psychology from Western Connecticut State University and her Master's of Science from Indiana State University. She loves combining her knowledge of psychology with her financial expertise so people can make better financial decisions.