Car liability insurance covers the costs for injuries and property damage you cause to others in an at-fault accident. It does not cover your own injuries or vehicle repairs. This insurance is legally required in almost every state to ensure drivers can pay for the harm they might cause. A standard policy is split into two main coverages: bodily injury (BI) liability and property damage (PD) liability.
Bodily injury liability pays for medical expenses, lost wages, and pain and suffering for other people injured in an accident you cause. It also covers legal fees if you are sued. Coverage limits are typically shown as three numbers (e.g., 25/50/25), representing thousands of dollars.
- $25,000 per person for bodily injury.
- $50,000 per accident if multiple people are hurt.
- $25,000 per accident for property damage.
These state minimums are often insufficient. A serious accident can easily exceed these limits, leaving you personally responsible for the difference. The Insurance Information Institute recommends higher limits, such as 100/300/100, for better protection.
Property damage liability pays to repair or replace other people's property you damage. This is most often another vehicle, but it can also include fences, mailboxes, buildings, or lamp posts.
It is critical to understand that liability insurance offers zero coverage for your own medical bills or your car's repairs. For that, you would need additional coverages like Personal Injury Protection (PIP), Medical Payments (MedPay), collision, and comprehensive insurance. Choosing liability limits is a balance between premium cost and financial risk; opting for only the minimum required by law can be a significant financial gamble.
