What is Liability Car Insurance?

If you cause an accident, liability car insurance pays for the legal, medical and repair costs to other people involved.

Liability car insurance — also called “standard car insurance” or “basic car insurance” — is required to drive legally in most states.

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What does auto liability insurance cover?

The liability-only portion of your car insurance policy covers expenses from any injury or property damage that you caused.

Be aware that liability insurance only covers other people’s costs from the accident but does not cover your own injury or damage. For that, you would need to invest in full-coverage car insurance.

Bodily injury liability

Bodily injury liability coverage handles any medical and legal costs you are found responsible for. This includes:

• Legal expenses: Your court-related costs and settlement payouts are covered under this policy type if you’re sued for damages by the injured party.
• Medical expenses: This provides coverage for hospital treatment, follow-up care and physical therapy for other people injured in the accident.
• Income loss: If others involved in the accident can’t work due to injuries, the insurance policy pays for compensation.
• Pain and suffering: Long-term physical, emotional and psychological pain due to the accident is also covered.
• Funeral costs: Funeral expenses are covered if the accident results in a fatality.

Property damage liability

Property damage liability covers damage you cause to someone’s car, home or other structure in an auto accident.

If you crash into someone else’s fence, for example, property damage liability pays for the needed repairs.

How does liability insurance work?

If you cause an accident, the other parties’ medical and repair bills are covered by your car insurance liability coverage, but only up to your policy limit.

Bodily injury liability limits are broken down into two types:

• Per person is the maximum amount of payout one person involved in the accident can get.
• Per accident is the most that everyone involved in the accident (except you) can receive.

Also, if the accident results in a lawsuit, you can generally file a claim to have your insurance pay for the court expenses and any settlements you need to pay.

How much liability insurance do I need?

In all states except New Hampshire, you must have car liability insurance to drive legally, although Virginia will also let you pay $500 to get out of having insurance.

Each state has its own car insurance liability requirements, and even New Hampshire and Virginia have minimum coverage levels for liability insurance.

But watch out: Most state liability levels might not be high enough to cover a serious accident, especially if a long court case or extended hospital stay is involved.

In order to avoid paying a fortune out of pocket, consider raising your limits to…

• $100,000 for bodily injury liability per person
• $300,000 for bodily injury liability per accident
• $10,000 for property damage liability

How much does liability auto insurance cost?

The average cost of liability car insurance in the U.S. is $772 a year.

South Dakota has the cheapest average liability car insurance rates, at $351 a year. Michigan has the most expensive average rate, at $1,849 a year.

Some factors that will affect how much you pay for liability car insurance are:

• The make and model of your car
• Your age
• Your ZIP code
• Driving record
• Insurance claim history
• The policy limits and deductible you choose

Different car insurance companies put different risk weights on these factors. For example, one insurer may think your age is a bigger risk than another company.

In order to find your best combination of cost and coverage, be sure to compare quotes from several car insurance companies.