Liability Insurance: How Much Auto Coverage?

Liability car insurance is a necessity for drivers in most states. It covers the cost of damage to other people's property and their medical expenses if you are responsible for an accident. The average cost of liability car insurance is $180 a month, but this can vary depending on factors such as your driving history, where you live, and the make and model of your car.

Liability insurance does not cover repairs to your own vehicle or your own medical expenses. To cover these, you will need additional insurance such as collision insurance or personal injury protection.

How much does liability insurance cost?

The cost of liability insurance depends on several factors, including your driving history, the amount of coverage you buy, and other factors that vary by state and company, such as gender, marital status, occupation, and credit. Auto insurance rates vary widely among companies because they all have their own way of calculating rates.

The national average car insurance cost of minimum car insurance, which typically includes liability auto insurance and other state-mandated coverage, is $488 per year, according to NerdWallet's June 2024 rate analysis. This rate goes up to $725 per year, on average, if you have an at-fault accident on your record. For drivers with a recent DUI, the average cost of minimum coverage liability insurance is $919.

The average cost for liability car insurance is $180 a month, or $2,160 a year, according to QuoteWizard. This average will vary depending on the state you live in and other factors. For example, Vermont and New York require the same minimum-coverage limits, but Vermont's average car insurance rate is less than half of New York's.

The cost of liability insurance can also depend on the make and model of your car, as well as its age. You can expect to pay more if you've had custom work done on the car. Additionally, your insurance history can impact the cost, with auto accidents, speeding tickets, and DUIs increasing your risk level and, consequently, your rates.

It's important to note that the state's average cost of auto liability insurance does not reflect its minimum coverage limits. Therefore, it is recommended to purchase more liability coverage than the state-mandated minimum to ensure adequate protection in the event of an accident.

To save money on liability insurance, you can compare quotes from different companies, choose a higher deductible, and look for discounts offered by insurers, such as bundling discounts or good driver discounts.

What does liability insurance cover?

Liability insurance coverage protects you financially if you're responsible for someone else's injuries or property damage. It is included in most vehicle and property insurance policies, including auto and homeowners insurance.

Liability insurance consists of two types of auto coverage: bodily injury liability protection and property damage liability protection.

Bodily Injury Liability Protection

This applies to the medical expenses of the other party if you are found at fault in an accident. In some circumstances, it may even cover lost wages and/or legal fees if the injured party files a lawsuit.

Property Damage Liability Protection

This applies to damages to property resulting from a covered accident in which you’re at fault. It may cover the other party’s vehicle repair or replacement costs, as well as other property that may have been damaged in the accident, such as fences, structures, and phone poles.

Liability insurance may also cover legal expenses for accident-related lawsuits. However, it is important to note that liability insurance does not cover your own injuries or damage to your own property.

When selecting a liability insurance plan, you will choose a coverage limit, which is the maximum amount your policy will pay for injuries or property damage you cause to others. It is recommended that you choose a liability limit that matches or exceeds your total net worth to ensure your assets are well-protected.

What doesn't liability insurance cover?

Liability car insurance provides financial protection if you are found legally responsible for an accident that results in injury, death, or property damage. It covers the costs of medical expenses and lost income for those injured in the accident, as well as repairs to the damaged property. However, it is important to note that liability insurance does not cover certain things. Here is a list of what is typically not covered by liability car insurance:

• Damage to your own vehicle: Liability insurance only covers damage to other people's property and not your own. If you want coverage for damages to your own vehicle, you will need to purchase collision or comprehensive insurance.
• Injuries to yourself or your passengers: Liability insurance covers the medical expenses and lost income of people injured in the accident, except for the policyholder and their passengers. To cover your own injuries, you may need to add personal injury protection (PIP) or medical payments coverage (MedPay) to your policy.
• Uninsured or underinsured motorist coverage: If you are hit by a driver who does not have insurance or does not have enough insurance, liability insurance will not cover your damages. You will need to purchase additional coverage, such as uninsured or underinsured motorist protection.
• Expenses exceeding your policy limit: Liability insurance has limits on how much it will pay out per person and per accident. If the expenses from an accident exceed these limits, you will be responsible for paying the remaining amount out of pocket.
• Theft or weather-related damage: Liability insurance only covers damages caused by the policyholder while driving. It does not cover theft or damage to your vehicle due to weather or other non-accident-related incidents. You will need comprehensive insurance to cover these types of incidents.

How much liability insurance should I carry?

The amount of liability insurance you should carry depends on your state's requirements, your net worth, and the value of your assets.

State Requirements

Nearly every state in the US requires drivers to have a minimum amount of liability insurance. This is the smallest amount of insurance you need to drive legally. The most common minimum liability limits are $25,000 per person and $50,000 per accident for bodily injury, and $25,000 for property damage. However, these requirements vary by state, with some states mandating higher or lower limits. For example, Florida requires a minimum of $10,000 for personal injury protection and $50,000 for property damage liability, while California requires a minimum of $15,000 for bodily injury to one person, $30,000 for bodily injury to multiple people, and $5,000 for property damage.

Net Worth and Value of Assets

When deciding how much liability insurance to carry, it's important to consider your net worth and the value of your assets. Liability insurance covers damage and injuries you cause to others in an accident. If you cause a severe accident and the related bills exceed your liability limits, you could be sued and held personally responsible for any remaining amount. Therefore, it's generally recommended to carry enough liability insurance to cover your net worth and protect your assets. A good rule of thumb is to have liability limits that are higher than your net worth. For example, if your net worth is $90,000, you may want to consider a policy with liability limits of $50,000 per person and $100,000 per accident for bodily injury, and $50,000 for property damage.

In addition to liability insurance, you may also want to consider other types of insurance, such as collision and comprehensive coverage, to protect your vehicle in the event of an accident or damage.

Do I need comprehensive and collision coverage?

Comprehensive and collision insurance are optional in every state but are often required by lenders if you are financing or leasing your vehicle. They are not legally required by any state, but they can be very useful in a variety of situations.

Collision Insurance

Collision insurance covers damage to your vehicle in the event of a collision with another vehicle or object, such as a tree, guardrail, pole, or fence. It also covers damage to your car if someone else hits you. This type of insurance is usually expensive, costing an average of $814 per year, but it could save you money in the long run if you get into an accident.

Comprehensive Insurance

Comprehensive insurance covers non-collision accidents, such as damage from severe weather, fire, vandalism, theft, and falling objects. It also covers collisions with animals. Comprehensive insurance is generally cheaper than collision insurance, costing around $367 per year on average.

Whether or not you need comprehensive and collision coverage depends on several factors:

• Your vehicle's value: If your vehicle is worth only a few thousand dollars, the potential insurance payout may not be worth the cost of the coverage, especially when you factor in the deductible.
• Your financial situation: If you can afford to repair or replace your vehicle out of pocket, you may not need comprehensive and collision coverage.
• Your location: If you live in an area with extreme weather conditions, natural disasters, high crime rates, or a high risk of animal collisions, comprehensive coverage may be a good idea. Collision coverage may be worth considering if you frequently drive in heavy traffic or crash-prone areas.
• Your driving habits: If you are a cautious driver who doesn't drive often, you may not need collision insurance.
• Leasing or financing your vehicle: If you are leasing or financing your vehicle, your lender will likely require you to carry both comprehensive and collision coverage.

Frequently asked questions