What Is Liability Insurance Coverage?

Most states require drivers to have auto insurance coverage — only New Hampshire and Virginia don't. Although the minimum car insurance requirements vary by state, liability coverage is always part of it.

Liability car insurance policies provide financial protection when you are behind the wheel, especially if you are at fault in an accident. It allows you to file claims that help pay for treatments for others' injuries sustained during the crash. It also covers any property damage to the other party resulting from an accident.

Liability insurance covers the driver of another vehicle if you are in an accident that is your fault. It doesn't cover you, your injuries or damages to your car. Still, it can help protect you from being personally sued if you have purchased enough liability insurance to cover the other party's losses. There are two types of liability insurance:

If you are at fault for an accident and cause injuries to the other driver or their passengers, liability car insurance can help you with the cost of treatment. The same goes for repairs for property damage to their vehicle. However, before your coverage kicks in, you must pay the deductible. The amount your insurer covers also depends on your policy limits. If costs from accident expenses exceed your policy limits, you will have to shoulder the remaining amount.

Liability insurance limit amounts are given as three numbers separated by slash marks, for example, 50/100/50. These numbers reference coverage limits in thousands for your policy in different categories. The table below highlights what each coverage means:

Remember that bodily injury liability is per person, while property damage liability is per accident. If you hit three people and three cars in the same accident, your insurance will cover up to $100,000 for the bodily injuries of the people you hit ($100,000 maximum) and only up to $50,000 for damages for all three cars.

This example illustrates how liability insurance is used and how not having enough liability insurance may lead to you paying out-of-pocket costs.

Susan is driving home from work and hits another vehicle. The other car is occupied by a couple, Dan and Amy, with their child, Allison, in the back. Susan has 50/100/50 in liability insurance.

• Dan injures his back, and his medical bills total $30,000.
• Amy breaks an arm and suffers internal injuries. Her medical bills cost $45,000.
• Allison breaks a leg, and her medical bills cost $7,000.

Susan's plan covers this scenario because all three people's injuries total $82,000, and Susan is covered for up to $100,000 per accident.

In comparison, imagine there's a fourth person in the car, Tony, whose medical bills total $40,000. Susan would then be responsible for paying the extra $22,000 not covered by her liability insurance. This also assumes no one in the car Susan hits sues her for lost wages or pain and suffering. Medical expenses add up quickly and could easily bankrupt you or significantly impact your finances.

States vary in how much liability coverage they require, with most states requiring at least $15,000 in bodily injury coverage per person, $30,000 in bodily injury per accident and at least $10,000 in property damage. The policy would read 15/30/10. Some states also require uninsured motorist coverage (UM), underinsured motorist coverage (UIM) and personal injury protection (PIP).

State minimum car insurance requirements for liability coverage may not be enough to cover you if you cause an accident. You will have to pay for anything not covered by liability insurance, and medical bills can skyrocket quickly.

The most affordable car insurance policy is a liability-only policy with state minimum coverage requirements. The national average cost of a liability car insurance policy is $628 per year or $52 per month. In comparison, a full coverage plan with comprehensive and collision coverages costs $1,358 per year or $113 per month. That's a difference of $730 per year.

Insurance companies consider various factors when calculating car insurance premiums. They may also provide different rates for the same coverage. Use the table below to compare costs for liability-only and full coverage policies from different companies.

The average cost of car insurance will vary depending on the state you live in. You can better estimate the cost of a liability-only policy for you by looking at the average annual and monthly costs in your state below.

Comparing car insurance quotes is an excellent and convenient way to get the best deal possible. Securing an online estimate typically involves providing certain information, such as your ZIP code, age range, whether or not you currently have coverage, the number of vehicles you want to be insured, if you're a homeowner, your credit score range, any traffic incidents and whether or not you're a military member. If you're uncomfortable sharing personal details, you may request car insurance quotes anonymously.

MoneyGeek's calculator can also help you get quick quotes from multiple providers. Use this tool to get accurate estimates based on your needs.

Liability car insurance is only one of the many ways to protect yourself, whether you're behind the wheel or not. The best car insurance for you depends on your unique situation. It's best to compare providers and policies to find what matches your needs. The following are some alternative options you may consider:

Liability insurance refers to policies that only coverage bodily injury and property damage. In this article, we discussed what a liability-only policy covers, how it works and the average costs to help determine whether this coverage is enough for your needs. Drivers who prioritize cost may find liability car insurance attractive since it's usually the most affordable option. However, it also offers the least amount of protection.

MoneyGeek answers frequently asked questions about liability insurance below to help you make a decision about coverage and find a provider:

MoneyGeek gathered and analyzed rates using a sample driver profile to determine company averages for the cost of liability-only insurance, how liability-only rates compare to full coverage rates and how rates may change for risky driver profiles (drivers with at-fault accidents and tickets).

Data Sources and Depth

We collected data from state insurance departments and Quadrant Information Services and analyzed 83,056 quotes from 46 companies across 473 ZIP codes.

Sample Driver Profile

To determine overall average annual car insurance rates, we used the following sample driver profile:

• 40-year-old male driver
• Driving a Toyota Camry LE
• No on-record violations

We modified this sample profile by age, driving record and car make/model where specified to provide average rates for a variety of drivers.

Coverage Levels Explained

Rates collected were for policies meeting the minimum requirements in a given state or for increased liability coverage. Increased liability coverage refers to a policy with 50/100/50 liability limits, which is shorthand for the following:

• $50,000 in bodily injury liability per person
• $100,000 in bodily injury liability per accident
• $50,000 in property damage liability per accident

You can choose how much liability coverage you want on either a liability-only or full coverage policy. The difference between liability-only and full coverage insurance is the addition of comprehensive and collision coverage. A liability-only policy does not include comprehensive and collision coverage.