What Is Liability Coverage?

Liability insurance pays for damages when you're legally responsible for causing an accident. Instead of paying to repair your own vehicle, your insurer pays eligible claims made by others, up to the limits of your policy.

Most liability policies include two primary coverages, while some states also require additional medical-related protections.

Common types of liability-related auto insurance coverage include:

• Bodily injury liability (BI): Pays medical expenses, lost wages, legal fees, and related damages for people injured in an accident you cause.

• Property damage liability (PD): Pays to repair or replace another person's vehicle, building, fence, mailbox, or other property you damage.

• Personal injury protection (PIP): Required in many no-fault states, PIP pays medical expenses and certain other costs for you and your passengers regardless of fault.

• Medical Payments (MedPay): Available in some states, MedPay helps cover medical expenses for you and your passengers after an accident, regardless of fault.

Liability insurance is designed to protect other people from financial losses caused by an at-fault driver. Depending on your policy limits, it may pay for:

• Medical bills

• Emergency transportation

• Rehabilitation expenses

• Lost wages

• Pain and suffering (when applicable)

• Legal defense costs

• Court judgments

• Vehicle repairs

• Damage to buildings, fences, guardrails, signs, and other property

For example, if you rear-end another vehicle and cause $18,000 in vehicle damage and $40,000 in medical expenses, your liability insurance pays those covered costs up to your policy limits. If the damages exceed your limits, you may be personally responsible for the remaining amount.

Liability-only car insurance has important limitations. It protects others—not you.

Liability insurance generally does not cover:

• Damage to your own vehicle

• Theft

• Vandalism

• Fire

• Flood damage

• Hail damage

• Falling objects

• Animal collisions

• Your medical expenses (unless required under PIP or MedPay)

• Rental reimbursement

• Roadside assistance

Drivers who want protection for their own vehicle typically purchase collision and comprehensive coverage in addition to liability insurance.

Liability limits are usually written as three numbers, such as 100/300/100 or 30/60/25.

The numbers represent the maximum your insurer will pay for:

For example, suppose you carry 100/300/100 liability coverage.

• One injured person can receive up to $100,000.

• Everyone injured in the accident combined can receive up to $300,000.

• Property damage is covered up to $100,000.

Many insurance experts suggest carrying liability limits above your state's minimum requirements because today's medical bills and vehicle repair costs can quickly exceed those minimums.

Every state establishes its own minimum liability insurance requirements. These minimums allow you to legally drive, but they aren't necessarily enough to fully protect your finances after a serious accident.¹

_{*Florida requires $10,000 PIP and $10,000 property damage liability; bodily injury liability may be required after certain at-fault accidents or license suspensions. New Hampshire doesn't generally require liability insurance, but does require drivers to demonstrate financial responsibility after certain accidents.}

Liability-only car insurance is generally the least expensive type of auto insurance because it doesn't cover damage to your own vehicle. Instead, it pays for injuries and property damage you cause to others when you're at fault in an accident.

Because every state sets its own minimum insurance requirements, there's no single "liability-only" price. Your premium also depends on factors such as your age, ZIP code, driving history, vehicle, coverage limits, and available discounts. 

To give you a sense of that range, here's how average premiums for state minimum coverage stack up state by state:

You may pay more for liability coverage if you:

• Have accidents or traffic violations

• Live in a densely populated area

• Drive many miles each year

• Have poor credit (where permitted)

• Choose higher liability limits

Luva research found that more than one in four auto insurance shoppers report at least one violation on their record.² Drivers with violations generally pay more, since insurers price for the added risk.

However, you can offset these rising costs and pay less if you:

• Maintain a clean driving record

• Bundle auto and home insurance

• Qualify for safe-driver or good-student discounts

• Compare quotes from multiple insurance companies before purchasing

Comparing quotes is one of the most reliable ways to lower your premium, since the same driver can get very different rates from different insurers. Luva makes that easy by putting quotes from multiple companies side by side, so you can find the best coverage, not just the best price.

Many drivers mistakenly believe "full coverage" is a separate insurance policy. It generally refers to a combination of liability, collision, and comprehensive coverage.

Drivers often consider switching from full coverage to liability-only coverage once an older vehicle has significantly depreciated in value. However, dropping collision and comprehensive coverage means you'll pay out of pocket to repair or replace your own vehicle after many types of losses.

If you're deciding between liability-only and full coverage, seeing the price gap helps. Luva lets you easily compare both so you can weigh the savings against the additional protection.