Liability Auto Insurance: Non-Vehicle Damage Coverage Explained

Liability auto insurance covers damage to other people's property and injuries to other people. It does not cover damage to the insured person's vehicle or their injuries. This type of insurance is mandated in nearly every state and Washington, D.C., with each state setting its own minimum coverage requirements. Liability insurance is intended to protect drivers from significant out-of-pocket costs and possible financial ruin following an accident they caused. It includes two main components: bodily injury liability and property damage liability.

Liability insurance covers property damage and medical expenses for others

Liability insurance is a critical component of your auto insurance policy. It provides drivers with third-party coverage when they are found liable for a car accident. This means that it covers medical payments and property damage for others resulting from a car accident. However, it does not cover damage to the insured vehicle or the medical payments for the insured driver or their passengers.

Liability insurance has two main components: bodily injury liability and property damage liability.

Bodily Injury Liability

Bodily injury liability covers the medical costs, lost earnings, and any legal costs if you are sued due to the accident. This includes emergency medical attention, ambulance costs, continued care expenses, and necessary medical equipment. It also covers lost income, including time missed from work for physical recovery, hospital stays, and medical appointments. Additionally, it should cover pain and suffering, as well as other non-economic damages such as scarring, disfigurement, and loss of enjoyment of life.

Property Damage Liability

Property damage liability covers the costs of repairing or replacing another person's property damaged in an accident. This includes damage to the other party's vehicle, rental cars, personal property inside the other party's vehicle (such as groceries or sports equipment), and property damage such as buildings, fences, or trees.

The liability coverage limits are the maximum amount your insurance company will pay per person or accident and are decided when purchasing the policy. If the accident expenses exceed these limits, you may need to pay the extra costs out of pocket. It is generally recommended to have liability insurance that covers your net worth to protect your assets.

It does not cover damage to your own vehicle or medical expenses for you or your passengers

Liability auto insurance is a critical component of your auto insurance policy, providing drivers with third-party coverage when they’re found liable for a car accident. It does not cover damage to your own vehicle or medical expenses for you or your passengers.

Third-Party Coverage

Third-party coverage refers to claims paid out to others, and does not cover damage to the named insured vehicle or the medical payments for them or their passengers. This type of insurance is mandated in nearly every state and Washington, D.C., each setting its own minimum coverage requirements. The primary purpose of liability insurance is to safeguard drivers from significant out-of-pocket costs and possible financial ruin following an accident they caused.

Bodily Injury Liability

Liability auto insurance functions by covering expenses linked to damages and injuries to others when you are deemed responsible for a car crash. It includes two main components: bodily injury liability and property damage liability.

Bodily injury liability covers the medical bills, lost earnings, and any legal costs if you’re sued because of the accident. However, it does not cover medical expenses for you or your passengers. To cover your own medical expenses, you would need to purchase additional insurance such as personal injury protection or health insurance.

Property Damage Liability

Property damage liability covers the costs of repairing or replacing another person’s property damaged in an accident where you were at fault. This can include the following:

• Damage to the other party’s vehicle
• Rental car for the other driver
• Personal property inside the other party’s vehicle, such as groceries or sports equipment
• Property damage, such as buildings, fences, or trees

However, property damage liability does not cover damage to your own vehicle. To cover the cost of repairs to your own vehicle, you would need to purchase additional insurance such as collision coverage.

It covers legal fees if you are sued after an accident

Liability car insurance provides financial protection for drivers who harm someone else or damage someone else's property in a car accident. It covers the costs of the other driver's property and bodily injuries if you're found at fault in an accident.

Bodily injury liability coverage pays for other people's medical costs when they're injured in a traffic accident you cause. This includes medical bills, pain and suffering, lost wages, and even funeral costs. It also covers legal fees if the injured party files a lawsuit.

Property damage liability coverage pays for damage to other people's property after a traffic accident you cause. This can include other vehicles, buildings, fences, and any other property damaged in the accident. It also covers legal costs for related lawsuits filed against you by the other party.

Liability insurance is required in nearly every state and provides essential financial protection for drivers. It helps cover the costs of accidents and can protect your assets in the event of a lawsuit.

It does not cover damage caused by intentional acts

Liability insurance is an essential safeguard for drivers, offering financial protection in the event of causing an accident that results in injuries or property damage. However, it's important to understand that liability insurance does not provide blanket coverage for all scenarios. One notable exclusion pertains to intentional acts of damage.

Liability insurance is designed to provide financial relief when a driver is deemed responsible for causing harm to others or their property. It encompasses two primary types of coverage: bodily injury liability and property damage liability. Bodily injury liability takes care of medical expenses, pain and suffering, and loss of income for those injured or killed in an accident caused by the policyholder. On the other hand, property damage liability covers the costs associated with damage to someone else's property, including vehicles, buildings, fences, and other items damaged in an accident.

While liability insurance is a valuable safeguard, it's crucial to recognize its limitations. One significant exclusion is intentional acts of damage. If a policyholder intentionally causes damage to another person or their property, their liability insurance will not provide coverage. This exclusion applies regardless of whether the damage was inflicted on another vehicle or caused without a vehicle. For instance, if someone vandalizes or intentionally damages another person's property, their liability insurance will not cover the costs of those intentional acts.

In addition to intentional acts, liability insurance also typically excludes coverage for damage caused while breaking the law. For example, if a driver is under the influence of substances or driving without a valid license and causes an accident, their liability insurance may not cover the resulting damages. It's important to carefully review the terms and exclusions of your specific liability insurance policy to understand the scope of your coverage.

To summarize, while liability insurance provides valuable protection in the event of accidental harm to others or their property, it does not extend to intentional acts of damage. Policyholders should be mindful of this exclusion and understand that they may be personally liable for any damages resulting from their intentional actions.

It is required in every state except New Hampshire and Virginia

In the US, auto insurance is required in every state except New Hampshire and Virginia. In Virginia, residents can waive liability coverage if they pay the state $500 annually. In Alaska, auto insurance is not required in remote areas.

Liability car insurance covers other people's expenses when you cause an accident. It has two main components:

• Bodily injury liability coverage pays other people’s medical costs when they’re injured in a traffic-related accident you cause.
• Property damage liability coverage pays for damage to other people's property after a traffic-related accident you cause.

Liability car insurance won't pay for your own medical bills or car repairs. To cover your own bills, you'll need to get additional types of insurance, such as personal injury protection or health insurance for your medical expenses, as well as collision insurance for repairs to your vehicle.

If you don't own a car but still drive occasionally, you should get non-owner car insurance. Non-owner car insurance provides liability coverage for individuals who drive cars they don't own.

Frequently asked questions