Liability Car Insurance Coverage (The Complete Guide)
Liability car insurance is the minimum coverage requirement in most states. Liability car insurance covers damages to third parties and the average rates are $48/mo.
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UPDATED: Sep 15, 2020
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|Coverage||Liability insurance coverage safeguards the welfare of a vehicle owner when road accidents happen.|
|Legal Requirement||Liability car insurance is required by law in most states.|
|Where to Shop||Those who want to purchase cheap liability car insurance coverage can find many insurance companies online and in their local area.|
Anyone who has ever registered a vehicle in their state has heard of the term “liability coverage.” This term is usually accompanied by the phrase “minimum state requirements,” as well. However, there is so much more to liability car insurance than just being a minimum requirement to register a vehicle in most states.
You don’t even have to own a car to carry a liability car insurance policy. Enter your information above to get started and then keep reading to find out more.
What is liability car insurance coverage?
Many people assume that if they have liability car insurance, they are covered for things such as theft, vandalism, or colliding with another car. The reality is that each of these traffic incidents is covered by other types of car insurance add-ons that may or may not be added to their policy.
When bundled together in a full-coverage policy, collision, comprehensive, and liability can help you recoup your losses from a variety of things. Individually, though, each one is designed to handle specific aspects of your overall claim. Keep scrolling to find out more.
What does liability insurance cover? What doesn’t it cover?
It is a common misconception that if you have liability car insurance coverage, you are protected against loss or injury if involved in a car accident. Liability coverage only covers third parties, meaning the driver and their property are not covered by liability car insurance.
Investopedia’s liability car insurance definition states: “financial protection for a driver who, while operating a vehicle, harms someone else or their property.”
Put plainly, if you are involved in a car accident, your basic liability car insurance coverage will pay for the injuries or damages that you inflict upon another person. So what types of car insurance coverage handle your injuries and property damage?
In the event of a car accident, collision car insurance will reimburse you, as the insured, for damages and injuries. Collision coverage will help with the costs of repairing your vehicle if you slide on ice or skid on a wet road causing you to collide with a stationary object, such as a tree.
If a limb falls off a tree when your car is parked, though, it falls under a separate component of your insurance policy known as comprehensive. Comprehensive car insurance covers damage to your car caused by incidents other than a collision. These things can include:
- Falling objects
- Natural Disasters
- Motor Vehicle Theft
Why do most states require you to carry liability and not comprehensive or collision? They do so to make sure that you can be held financially responsible for any damage or injuries that you inflict on other persons while operating your automobile.
In a no-fault state, liability car insurance works a little differently. If you are in a no-fault state, then, according to NOLO:
Rather than submitting your claim to the negligent driver’s insurance company, you submit your claim to your own insurance company. Your insurance company then pays damages to you for the injuries you suffered in the car accident, regardless of who was legally responsible for causing the car accident.
According to the Insurance Information Institute (III), some states that have no-fault car insurance laws include:
- New Jersey
- New York
- North Dakota
Whether you are in a no-fault or at-fault state, knowing how your liability car insurance works and just what and who is covered is crucial. This starts with knowing the difference between bodily injury liability and property damage liability.
Bodily Injury Liability vs. Property Damage Liability
Your liability car insurance is comprised of two different types of coverage: bodily injury and property damage.
Bodily injury liability helps pay for injuries that you might cause to another driver, a pedestrian, a passenger, and/or a bicyclist while operating your automobile.
Bankrate points out that “the policy covers medical expenses and lost wages as well as legal and funeral expenses in some cases.”
If you fail to stop in time at a red light and you rear-end the car in front of you, causing the driver whiplash and forcing them into the crosswalk where they strike a pedestrian, then your bodily injury liability insurance will cover the medical expenses of all of the parties injured by your negligence.
Your property damage liability will kick in to cover damages to the other driver’s car.
Legal Dictionary asserts that “property damage liability may be awarded in a lawsuit for damage caused by another person’s negligent or willfully destructive behavior.”
Property damage liability coverage helps pay for the repairs to another person’s property caused as a result of your actions. Usually, damage to your vehicle will not be covered, so it is a good idea to consider collision or comprehensive coverage if you are particularly accident-prone.
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Who needs liability car insurance coverage?
According to the Insurance Information Institute (III), most states have some form of compulsory law regarding liability car insurance coverage.
Some states also require licensed drivers to carry other types of coverage, such as personal injury protection and uninsured motorists. The types of coverage each licensed driver is required to carry in any individual state is different because the needs of the states and their citizens are different.
This state might also make uninsured motorist coverage a required part of the state minimums for car insurance to make sure that everyone is physically and financially covered in the event of an automobile accident.
Some of the other factors that state legislators look at when passing compulsory car insurance mandates are similar to those car insurance companies look at when setting your rates. These factors can include things such as:
Your age and your driving record help state legislators determine if laws for older drivers or teen drivers need to be enacted, and in states like California, state legislators look at how credit scores are being used to negatively impact low-income drivers so they can pass laws to protect consumers.
No matter how much money you make, if you drive a car in the United States, you are likely going to need liability car insurance coverage to meet your state’s minimum requirements.
The question is not do you need liability car insurance then, but how much coverage you need. Keep reading to find out how we can help you figure that out.
How much bodily injury liability coverage do I need?
To determine how much bodily injury liability coverage you will need, you should first start by finding out what the minimum requirements are for your state.
Take a look at the table below to see what your state requires, according to the Insurance Information Institute (III).
|State||Insurance required||Minimum liability limits|
|AK||BI & PD Liab||50/100/25|
|AL||BI & PD Liab||25/50/25|
|AR||BI & PD Liab, PIP||25/50/25|
|AZ||BI & PD Liab||15/30/10|
|CA||BI & PD Liab||15/30/5|
|CO||BI & PD Liab||25/50/15|
|CT||BI & PD Liab, UM, UIM||25/50/20|
|DC||BI & PD Liab, UM||25/50/10|
|DE||BI & PD Liab, PIP||25/50/10|
|FL||PD Liab, PIP||10/20/10|
|GA||BI & PD Liab||25/50/25|
|HI||BI & PD Liab, PIP||20/40/10|
|IA||BI & PD Liab||20/40/15|
|ID||BI & PD Liab||25/50/15|
|IL||BI & PD Liab, UM, UIM||25/50/20|
|IN||BI & PD Liab||25/50/25|
|KS||BI & PD Liab, PIP||25/50/25|
|KY||BI & PD Liab, PIP, UM, UIM||25/50/25|
|LA||BI & PD Liab||15/30/25|
|MA||BI & PD Liab, PIP||20/40/5|
|MD||BI & PD Liab, PIP, UM, UIM||30/60/15|
|ME||BI & PD Liab, UM, UIM, Medpay||50/100/25|
|MI||BI & PD Liab, PIP||20/40/10|
|MN||BI & PD Liab, PIP, UM, UIM||30/60/10|
|MO||BI & PD Liab, UM||25/50/25|
|MS||BI & PD Liab||25/50/25|
|MT||BI & PD Liab||25/50/20|
|NC||BI & PD Liab, UM, UIM||30/60/25|
|ND||BI & PD Liab, PIP, UM, UIM||25/50/25|
|NE||BI & PD Liab, UM, UIM||25/50/25|
|NJ||BI & PD Liab, PIP, UM, UIM||15/30/5|
|NM||BI & PD Liab||25/50/10|
|NV||BI & PD Liab||25/50/20|
|NY||BI & PD Liab, PIP, UM, UIM||25/50/10|
|OH||BI & PD Liab||25/50/25|
|OK||BI & PD Liab||25/50/25|
|OR||BI & PD Liab, PIP, UM, UIM||25/50/20|
|PA||BI & PD Liab, PIP||15/30/5|
|RI||BI & PD Liab||25/50/25|
|SC||BI & PD Liab, UM, UIM||25/50/25|
|SD||BI & PD Liab, UM, UIM||25/50/25|
|TN||BI & PD Liab||25/50/15|
|TX||BI & PD Liab, PIP||30/60/25|
|UT||BI & PD Liab, PIP||25/65/15|
|VA||BI & PD Liab (9), UM, UIM||25/50/20|
|VT||BI & PD Liab, UM, UIM||25/50/10|
|WA||BI & PD Liab||25/50/10|
|WI||BI & PD Liab, UM, Medpay||25/50/10|
|WV||BI & PD Liab, UM, UIM||25/50/25|
|WY||BI & PD Liab||25/50/20|
As you can see, the required coverage amounts can vary widely by state — and sometimes just meeting the minimum state requirements isn’t enough.
Kiplinger recommends that you should carry as much liability coverage as you can comfortably afford because damage claims today are sometimes settled for millions.
The Wall Street Journal also points out that:
You’re on the hook when costs exceed your coverage limits. That’s why many people opt for policies that cover more than required minimums, particularly if they have assets that can be seized to pay for repairs and medical care.
When you are deciding how much bodily injury liability coverage that you might need, purchase enough coverage to protect the total value of your assets should you be sued.
These assets include:
- Your car
- Your house
- Your investments
- And any personal property you might be forced to liquidize to pay off a claim made by another person.
These assets can become part of a property damage liability lawsuit as well, so you should think very carefully about how much of this type of coverage you might need.
How much property damage liability coverage do I need?
Like bodily injury liability coverage, the minimum requirements for the amount of property damage liability coverage you might be required to carry can vary by state.
Just like with bodily injury liability coverage, there is a chance that you will need more than just the minimum the state requires. How much bodily injury and property damage liability coverage you need depends on the value of the assets that might become part of a lawsuit if you are ever sued after an accident.
How much will liability coverage cost me per month?
According to the Insurance Information Institute (III), the average annual cost of liability coverage stood at $566.51 nationally for 2016. This means that the average American paid around $48 a month just to maintain their state’s minimum requirements.
Take a look to see how your state compares:
|State||Liability for 2016||Collision for 2016||COmprehensive for 2016||Average Expenditure 2016||2016 Rank|
These average expenditures for liability are a small price to pay, considering the incurred losses for private passenger auto liability coverage stood around $90.5 million for 2017 alone.
These incurred losses include the total amount of claims and loss of reserves that insurance companies reported for that year. Looking at these losses compared to the average cost for liability coverage demonstrates how most drivers who had to file a claim were able to recoup some of their losses because they had the right amount of coverage.
Having the right amount of coverage can sometimes mean just increasing your liability amounts, and sometimes it can mean adding things like comprehensive or collision coverage to your policy This will cause the price of your policy to increase, but so will your coverage amounts in case you are involved in a car accident.
Part of making the decision to add collision or comprehensive — or just to increase your liability coverage — is considering what these additions might mean to you based on the state you live in.
According to III, the top 10 most expensive states for car insurance in 2016 were:
|Rank||State||Average Expenditure 2016|
In some of these states, it might be better just to increase your liability coverage rather than payout for the added bonuses that comprehensive and collision coverage can provide.
In a state that is less expensive, you might have extra money from paying less for liability coverage, which could be best spent adding comprehensive and/or collision to your policy.
Take a look and see if your state ranked among the top 10 least expensive states for car insurance in 2016, according to III.
|Rank||State||Average Expenditure 2016|
Certain car insurance companies are also cheaper than others on average, according to U.S. News and World Report’s 2019 study, which listed USAA, American Family, Farmers, and Geico, and Travelers among the top 10.
Knowing how much coverage to purchase, which type is best for you, and how to balance between the two is a matter of considering the value of your assets and how much you can stand to lose should you be involved in a car accident.
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Liability Car Insurance Limits Explained
When you sit down to write your car insurance policy with your agent, you will hear a lot of terms that may seem familiar but that you aren’t sure you understand. Two of the most commonly confused are the terms limits and deductible.
Knowing the difference between these two terms can make a huge difference in the type of coverage you choose and whether you will have enough coverage to protect you and your assets should anyone file a claim or bring suit against you.
Not to worry. We are here to help you by shedding some light on the difference between limits and deductible so you can make the best decision for you and your family when purchasing your car insurance coverage. Keep scrolling to find out more.
What are coverage limits?
If you are ever in a car accident, you will be held financially responsible for all of the damages you cause. To protect all their citizens, most states have financial responsibility laws that set minimum state requirements for car insurance.
Most of these laws mandate that minimum state requirements include some type of liability amount. This minimum amount is called your coverage limit.
A coverage limit is how much your car insurance company will pay out if someone files a claim against your policy.
So what does all of this mean? If you are in a car accident and you cause $50,000 worth of bodily injuries, but your limits are set at $25,000, you will be responsible for making up the difference.
If you cannot pay out this difference in cash, you could end up getting sued by the other party. If this happens, their attorney might try going after your assets, such as your home or your retirement plan, to recoup the losses incurred by their client.
This is why it is so important to choose the right coverage amounts, even if it will end up costing you a few extra dollars a month in premiums.
Coverage Limits vs. Deductibles
Choosing the right coverage limits is not the only thing that you have to consider when purchasing your car insurance policy. You should also think about what deductible amounts are right for you.
Financial Answers defines a deductible as a “specific amount of money that you are required to pay before the insurance company will reimburse you for damages.”
This is different than your coverage limit amount, which determines how much your car insurance company will payout in the event of an accident.
Many people choose lower deductibles to save a few dollars on their car insurance policy since lower deductible amounts usually translate into lower premiums.
Deciding on your deductible amount is not that simple, though. If you have a high deductible, you might have a lower premium, but you will also be forced to pay more out-of-pocket expenses should you ever cause an accident.
Higher deductibles make sense if you have a clean driving record, live in a place where accidents rarely occur, or have enough money set aside to pay out of pocket for any property damages or bodily injuries that you might cause if you are ever in a car accident.
How much you can afford to pay out before your car insurance begins to pick up the tab is a personal choice, but it is one that can carry with it some unforeseen consequences if you don’t consider carefully before signing on the dotted line.
Bodily Injury Limits vs. Property Damage Limits
To know which coverage limits and deductible amounts are right for you, you must understand what the three numbers mean when you see liability coverage expressed in your policy or in the financial responsibility law for your state.
These numbers often appear something like 25/50/25.
These numbers actually mean $25,000, $50,000, and $25,000, and each amount defines the coverage limits for a specific part of your liability coverage.
The first number is the coverage limit amount your car insurance company will payout to a claimant for the bodily injuries of one person.
The second number is the coverage limit your car insurance company will payout to cover the costs of all bodily injuries caused to all injured parties in an accident.
The third number expresses the coverage limit for the property damage component of your liability insurance policy. This is the limit of what your car insurance company will pay out for all property damages that you might cause in the event of a car accident.
What is a good bodily injury coverage limit?
Although many states set minimum requirements on the amount of bodily injury coverage limits you must have, you should always consider paying a few dollars extra each month to increase these limits.
These few extra dollars can help you save time, money, and frustration down the road.
So what is a good amount of bodily injury coverage to purchase? The answer is that you should always purchase enough coverage to prevent the possibility of having your assets seized as the result of any lawsuit that might come out of a claim that was filed against you for causing an accident.
If you own a house worth $100,000 and another car worth $25,000, you should consider upping your bodily injury limits to a minimum of $125,000 on top of what your states minimum requirements are.
This may mean that you pay higher premiums, but the extra money spent will be well worth it if you are ever involved in a serious car accident.
What is a good property damage coverage limit?
Just like in the case of deciding on the amount of bodily injury coverage limits, you should always consider your assets when thinking about your property damage coverage limits, because your assets can easily become part of a settlement amount if you’ve reached your liability limits and there is still property damage left to be paid.
For this reason, Kiplinger recommends that “you should carry bodily-injury coverage of at least $100,000 per person, and $300,000 per accident, and property damage coverage of $50,000, or a minimum of $300,000 on a single-limit policy.”
Founded by a former Associated Press economics reporter during the 1920s, Kiplinger has a reputation for giving straightforward business forecasts and solid financial advice, and the advice that it offers when it comes to deciding on how high to set your liability limits is to choose limits that aren’t just the bare minimum.
Kiplinger even suggests considering an umbrella policy as one way of increasing your liability limits overall. Investopedia defines this type of policy as a failsafe to protect your savings and assets in the event of a lawsuit resulting from a car accident.
Investopedia also points out that:
If a policyholder is sued for damages that exceed the liability limits of car insurance, homeowners insurance or other coverage types, an umbrella policy helps pay what they owe. It may also provide coverage not included in a base insurance policy.
Whether or not you feel that purchasing an umbrella policy is a necessary step is up to you. If you cause a car accident and don’t have limits that are high enough to cover all the bodily injuries or property damage, though, things can quickly get out of hand.
What to Do After a Car Accident
There is a lot to think about before a car accident has occurred and even more to think about afterward.
- Should you file a claim?
- Will your claim be denied?
- Should you get an attorney?
- Will the other person file a claim?
- What will that do to your car insurance rates?
These are all valid questions, but their answers are not always clear. That is where we come in.
We have done the research to get the best answers to these questions and many more like them. Keep reading to find out how we can help you make sense of it all.
Top 10 Writers of Private Passenger Auto Insurance According to the Insurance Information Institute
Being prepared before an accident occurs and choosing the right car insurance provider will help prepare you so you’ll know what to do after an accident happens. As you compare car insurance providers and rates, you should be thinking beyond just what your monthly car insurance bill will be.
One of the most important factors to consider is the number of direct premiums written by a particular car insurance provider. Take a look at the top 10 writers of private passenger auto insurance policies according to the Insurance Information Institute (III).
|Company||Direct Premiums Written 2018||Market Share|
|American Family Insurance Group||4,975,128||2%|
|Berkshire Hathaway Inc.||33,075,434||13.4%|
|Farmers Insurance Group of Companies||10,496,476||4.3%|
|Nationwide Mutual Group||6,726,799||2.7%|
|State Farm Mutual Automobile Insurance||$41,963,578||17%|
|Travelers Companies Inc.||4,697,743||1.9%|
|USAA Insurance Group||14,467,936||5.9%|
What do direct premiums written, market share, and is one of the top 10 largest car insurance providers mean to you after an accident? These companies are less likely to deny your car insurance claim should you ever need to file one.
They also determine how likely your insurance company will be to pay out to a third party should you need to use your bodily injury or property damage liability coverage to help pay for anything you are responsible for as a result of an accident.
The number of direct premiums written tells you how much a car insurance company has financially grown during a given period. The more growth the company is experiencing, the more stable it is, making it more likely to pay out a claim.
The market share a car insurance company controls tells you how many customers it services. The larger the market share, the lower the potential of having your claim denied, because your car insurance company has enough revenue to cover claims courtesy of the number of direct premiums it is writing.
Knowing the number of direct premiums written and the size of the market share your car insurance company controls can ease a lot of your fears after an accident because you will know you have chosen a car insurance provider that can help you cover the bodily injury and property damage claims that might be filed against you.
Filing a Claim
Once you have chosen the right car insurance provider, the steps to follow after an accident get a lot clearer.
You should contact your car insurance provider as soon as possible after an accident, but did you know what you do in the first few minutes after an accident could be critical to protecting yourself against claims or lawsuits?
If you are ever involved in a car accident, you should never talk to anyone except law enforcement officers, emergency personnel, or agents from your own insurance company when you are at the scene.
When speaking to anyone at the scene, you should also be mindful of what you say. Your statements could be used against you later once the claim process has begun.
There are a few things you can do at the scene to help you get through the claims process quicker. They include:
- Collecting the insurance information on the other parties involved in the accident
- Getting the accident report number from law enforcement official so you can provide it to your car insurance provider
- Keeping track of as many names of people at the scene and any details, like weather and road conditions, as you can
The more information you can provide your car insurance company when you contact them, the more efficient your provider can be at helping you file a claim.
The claims process begins the moment you contact your insurance provider, but the statute of limitations on filing a claim begins the moment you have the accident.
Find Law points out that to stop the clock on your statute of limitations, you must file a lawsuit. Lawsuits are not the same as claims, so you should always check with your agent to see what your state’s specific statute of limitations on filing a claim is.
Generally speaking, the claim process proceeds as follows:
- Make contact with your agent to provide them with the accident details
- Obtain a copy of the accident report and submit it to your agent
- Meet with the claims adjuster and receive estimates for property damages
- Submit the required paperwork to your agent or car insurance providers, such as estimates, medical bills, or any written communication that the other driver’s attorney or car insurance company might send to you
- Wait for settlement details and negotiate through your agent and/or your attorney to reach a final agreement between all parties involved
Every time you have contact with your agent, you should have your personal information such as policy number, date of birth, and any other relevant paperwork handy for quick reference.
Bodily Injury Claims vs. Property Damage Claims
When a claim is filed against your liability policy, it will fall into one of two categories: bodily injury or property damage.
If a driver has to visit the doctor because of injuries sustained during a car accident you cause, then their medical bills will be handled through the bodily injury coverage aspect of your car insurance policy.
If you rear-end a driver at a red light and their bumper falls off, the repair to is handled under the property damage aspect of your property damage liability coverage.
The claims process is the same regardless of which type of liability coverage is handling the bills.
- You must contact your agent as soon as possible after the accident.
- You must provide as much relevant information as you can to your car insurance provider.
- You must submit all the required paperwork and meet with any adjusters handling your claim.
- You must make sure you file within the statute of limitations, or your claim becomes void.
- You are still the final say in whether a claim levied against you is settled out.
Who and what is covered under your liability policy is out of your hands, because it has been predetermined by the conditions of the coverage you chose when you signed up with your insurance provider.
Who is covered by my bodily injury liability coverage?
As a general rule, bodily injury liability coverage will pay for all bodily injuries incurred by passengers in your vehicle at the time of the accident.
Your bodily injury coverage will also cover the driver of another car you may have hit, their passenger(s), a pedestrian you struck with your car, and/or a cyclist that is not at fault in a car accident with you.
This means that if you rear-end another car, force it into a crosswalk, and that car strikes a pedestrian, you will be responsible for all injuries to anyone physically hurt due to your negligence. The pedestrian may be able to file against both your and the other driver’s liability coverage as well, depending on the circumstances.
Bodily injury liability will help pay for the lost wages, lost income, and legal fees of any party injured in a car accident that is your fault. If you hit a food truck, you could be held responsible for paying the loss of income the food truck company incurs while it is being repaired.
The damage to the food truck itself will be handled under the property damage aspect of your liability coverage.
What do I do if someone files a bodily injury claim against me?
The first thing you should do the moment you become aware someone has filed a bodily injury liability claim against you is to contact your car insurance provider. You should also refrain from talking to the other party, their car insurance provider, or any legal representation they might have retained.
All of these entities will most likely be trying to assess who was at fault in the car accident to ensure the proper parties are held financially responsible for all the bodily injuries and property damage caused as a result.
Determining who is at fault is a critical part of the claims process in at-fault (or tort) states. In states with no-fault insurance laws, the lines are not so clear and are often drawn by the car insurance providers, law enforcement officers, and attorneys who are involved in the case.
Most no-fault states require personal injury protection (PIP) as a component to your overall car insurance policy to make sure all parties involved can be taken care of after an accident. Unlike liability coverage, PIP covers you, as the driver as well as your passengers.
PIP doesn’t just cover your medical costs, either. PIP can also cover lost wages and pain and suffering in some instances.
No matter which type of state you live in, what you do right after an accident and the type of car accident you’re in will ultimately determine who pays for what and under which coverage type each part of a claim is filed and/or paid out.
Investopedia also points out that:
Regardless of the scope of the accident or who was at fault, the number of insurance claims you file also has a direct impact on your rates.
If you are found to be at fault in an at-fault state, you can just about guarantee it will cost you higher premiums. You might even experience a rate hike if you are not found to be at fault if there are mitigating circumstances such as previous tickets, or you have filed previous claims for things such as damages caused by a natural disaster or theft.
If you have a claim filed against you, or you file a claim against your own policy in a no-fault state, the results will likely be the same regardless of mitigating circumstances. The trick is to know when to file a claim and when it is best to settle out car accident injuries and property damages without involving car insurance providers if possible.
Who is covered by my property damage liability coverage?
If you are the cause of property damage in a car accident, your property damage liability coverage will be used to pay for the damages inflicted on a third party as a result of your negligence.
If you hit a car and dent their fender, your property damage liability coverage will pay to have it repaired. Your property damage liability coverage will also pay to have things like a building front or fence repaired if they were damaged during the accident.
According to NOLO, the type of accident and the type of damages that occur during the accident can help you if your claim is denied or someone is trying to file a claim against.
For instance, if you are driving straight and someone turns left in front of you, then where the damage is located on both of your cars can help law enforcement, your legal representation, and your insurance claims adjuster determine who was actually at fault.
Once the fault has been determined, it is less likely that your claim will be denied, and if it is, then the ability to prove fault (or lack of fault) can help you refile the claim if necessary.
Being aware of the entire accident scene can also help you, your claims adjuster, law enforcement, and/or your legal team prove your innocence if someone files a claim against you.
This is why it is so important to pay attention to the scene of an accident and to collect as much evidence as you can while you are there.
You should also be aware that your property damage liability coverage will not cover your property damage. This is covered under your collision coverage if you have opted in to that type of insurance as part of your overall policy terms.
Another part of negotiating how your property damage liability coverage works is understanding the difference between vandalism and malicious property damage.
Vandalism occurs when an unknown party damages your car as a result of a riot or motor vehicle theft. This is handled under the comprehension component of your car insurance policy if you have opted into this type of additional coverage.
Malicious property damage occurs when you are in traffic, and someone, in a fit of road rage, has a lapse in judgment and damages your car.
In this instance, malicious property damage may be covered under your property damage liability coverage, so you should contact your agent to find out if it might be worth filing a claim for repairs.
Understanding who and what is covered by the property damage liability component of your policy doesn’t just mean understanding where the lines between malicious property damage and vandalism are. It also means figuring out what the terms “property damage loss waive” and “property damage release form” means.
Plainly stated, these terms are defined as follows:
- A property damage loss waiver is a damage liability option that provides financial protection to groups such as fleet trucks.
- A property damage release form is the form you sign when you are settling out the property damages component of an insurance claim. This form removes your right to sue for further damages beyond those handled in the settlement agreement.
Even after you have settled out, claims against your property damage liability coverage can have a similar impact on your car insurance rates as bodily injury liability claims. Claims of any kind involving you and filed against your car insurance provider have the potential to raise your rates.
The numbers can be starling — the 2015 CBS report revealed that:
Drivers who make a single claim of $2,000 or more can expect their premiums to increase by 41 percent. That translates to a $335 increase for the average U.S. auto insurance premium of $815 a year. For the unfortunate souls who make two claims in one year, the increase jumps to 93 percent.
The best way to prevent a rate hike is always to drive defensively, keeping both hands on the wheel and both eyes on the road.
What if I cause an accident that costs me more than my bodily injury or property damage liability limits?
If you have caused an accident costing more than your bodily injury or property damage liability limits can pay for, all is not lost. There are particular add-ons and other types of coverage that can help you pay the bills if you’ve opted into them when you signed up for your car insurance policy.
Comprehensive and collision coverage are two of the biggest types of coverage that can help pay for certain aspects of the property damage and bodily injury depending, on the type of accident and how fault was assigned during the investigation.
PIP, an umbrella policy, and uninsured/underinsured motorist coverage can also help pay some of the bills in certain situations.
Underinsured motorist insurance is likely going to be the type of coverage that helps you cover the costs since it is specifically designed to pay out in the event that someone’s limits have been reached.
If you do not have any types of additional coverage to help you bridge the gap between the costs of the bodily injury and property damage claims and what your limits allow, it might be a good idea to get an attorney to help you protect your assets in case you are sued.
Time Limits to File A Claim
We’ve talked a little about the statute of limitations for filing a claim or lawsuit after a car accident in a previous section. Here is a quick reminder that the statute of limitations begins to run on the day of the car accident and can only be halted by filing a lawsuit — not by filing a claim.
Take a look at the statute of limitations for filing a property damage claim in your state.
|State||Statute of Limitations for Property Damage|
|New Hampshire||3 years|
|New Jersey||6 years|
|New Mexico||4 years|
|New York||3 years|
|North Carolina||3 years|
|North Dakota||6 years|
|Rhode Island||10 years|
|South Carolina||3 years|
|South Dakota||6 years|
|West Virginia||2 years|
Bodily injury claims also have a statute of limitations for filing, so be sure to contact your agent to find out what these are in your state.
What to Do if Your Claim Is Denied
If you have been in a car accident and were not at fault, you will want to make sure the responsible party pays for your injuries or property damage. Even if you were at fault, or if you live in a no-fault state, you will want to make sure all of the bills get paid.
One of the best ways to do this is to file a claim against your insurance company or the insurance company of the at-fault party. When the claims process goes smoothly, everyone files the proper paperwork, the bills get paid, and the claim settles out quickly.
Things don’t always go smoothly, though. Sometimes when you file a claim, the car insurance provider will deny it. The first thing you should do if your claim is denied is to find out why.
According to Find Law, the two main reasons for a claim denial are usually that either that the claims adjuster feels your claim lacks merit or the insurer is attempting to have you drop the case altogether. If you believe your claim has merit, you should absolutely pursue it.
There are other reasons that your claim might be denied, including:
- Failing to notify your car insurance provider in a timely manner
- A lapse in coverage
- Exclusions in your policy that do not allow for the type of claim you are attempting to file
Once you find out why your claim was denied, you should make any necessary corrections to will help correct the errors, and then refile. If you refile and are denied again after meeting the proper criteria you should consider hiring an attorney.
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Do I need an attorney to handle my car insurance claim?
Claim denials are one of the top reasons people who have been involved in a car accident seek out legal counsel.
Some other reasons include a lack of experience with insurance terminology, the number of bodily injuries or property damage, and/or the number of mitigating circumstances that could impact the outcome of a claim.
While we can’t help you minimize the size of your claim or the circumstances that surround it, we can help you figure out which type of attorney might be right for you if you should need assistance in settling your claim. Keep scrolling to find out more.
Bodily Injury Attorney vs. Property Damage Attorneys
Bodily injury claims are usually handled by personal injury attorneys because personal injury law is similar to the laws pertaining to bodily injury liability claims. Bodily injury and personal injury claims both handle medical expenses, lost wages, and pain and suffering where applicable.
The main difference between the two is that bodily injury pertains to damages you have inflicted on others, whereas personal injury claims can pertain to both your injuries and the injuries of third parties being handled in one claim.
Unlike personal injury or bodily injury attorneys, property damage attorneys do not handle medical expenses or lost wages. Instead, property damage attorneys handle the damage to property specifically. These things can include costs such as towing expenses, rental car expenses, and damage to personal items that are the result of a car accident.
Quite often, if you select the right attorney, they can handle personal injury, bodily injury, and property damage claims.
When to Get a Bodily Injury Attorney
If you are involved in a car accident that does not involve property damage, the best choice is to select an attorney with this type of specialized practice. One of these cases might be if you were to strike a pedestrian.
In this instance, the only property damage that might be involved in the accident claim would be to your own car, which liability coverage will not cover, so you will only need to pay out to cover the costs of the medical expenses for the pedestrian.
Getting an attorney to help make sure you are protected could help prevent the possibility that the pedestrian tries to sue you for injuries that did not occur as a result of the accident.
When to Get a Property Damage Attorney
Car accidents that involve property damage are more common than you might think. One of these types of accidents could include the bumper contact accident you had in the parking lot at the grocery store with the empty car.
Hitting an empty parked car might leave a dent in someone’s bumper but would not result in injuries to anyone (except you if you are the only occupant of your car).
Getting an attorney for an accident like this could protect you from unscrupulous repair shops who might be seeking more money for repairs than they cost.
A property damage attorney could also protect your assets from being attached to a lawsuit if the damage to the car proves to be beyond the limits of your property damage liability coverage.
What is negligence property damage?
Sometimes you don’t need an attorney, even though you have had a lawsuit filed against you. This can happen when the cost of hiring an attorney might outweigh the cost of litigating the case yourself in small claims court.
Forbes defines small claims courts as the branch of the local court system “in which claims for small sums of money (usually between $5,000 and $10,000) can be heard and decided on quickly, without the need for legal representation.”
One of the most likely aspects of a liability claim that could bring you to a small claims court is negligent property damage. This is damage brought on as a result of another person’s careless (aka negligent) behavior, which has caused damage to property.
If the bumper damage in your little grocery store fender bender is small enough, you might find yourself handling your settlement details in small claims court.
The key to proving negligence is proving the other party did not act in a reasonable manner. Whether you handle your case through an attorney, a car insurance agent, or through small claims court, you should be careful what you sign.
Be sure to read each line of your settlement agreement carefully, so you understand whether you are settling out just the property damage claim or if you are settling the bodily injury aspect — or if you’re settling both.
The Importance of Having Enough Bodily Injury & Property Damage Liability Car Insurance Coverage
Having the right amount of bodily injury and property damage liability coverage is critical. Without the right amount of coverage, you could be risking everything you own if you are ever involved in a car accident. The right amount of liability coverage can help protect your house, your savings, and all the people involved in any car accident you may cause.
Figuring out how to protect yourself and the ones that you love in case of an accident can bring up a lot of questions, as well. Here are a few of the most frequently asked.
Does my liability insurance cover my medical expenses or property damage?
No. Liability car insurance only pays for the medical bills, lost wages, and property damage incurred by your passengers and any other party that you may have inflicted injuries or damage on.
Does liability insurance cover pain and suffering?
Generally speaking, liability insurance will cover pain and suffering, but you should check with your agent to be sure that there are no exclusions regarding this in your policy.
Will my liability pay for property damages if I hit a building?
Your particular set of circumstances that forced you into the building will determine which aspect of your car insurance policy will handle the bills for damages. If you hit a building, you should contact your agent immediately and ask them if the way in which you were forced into the building is covered under collision or liability.
What if I hit a food truck?
Food trucks are considered businesses, so you could be liable for the bodily injuries of any of the employees who are occupying the truck at the time and any lost wages they might have. You could also be responsible for paying back the lost revenue to the business while the food truck is in the repair shop.
Does my liability cover my passengers if I am a rideshare driver?
If you are a rideshare driver, the best thing that you can do is invest in a rideshare endorsement to add to your car insurance policy. If you were on the clock, then after your rideshare company pays out your liability policy will kick in along with your rideshare coverage. Maneuvering this type of claim is tricky, though, so you should consider consulting legal counsel.
Should I add an umbrella policy to my liability insurance?
If you have a considerable amount of assets, then adding an umbrella policy to your car insurance is a great idea. Once you exhaust your liability limits, your assets could become part of any award settlement given over to a third party if you are found at fault.
Who are the top five providers for liability insurance?
According to Bankrate, the top five providers for liability insurance are State Farm, Berkshire Hathaway, Progressive, Allstate, and USAA.
How do insurance companies calculate pain and suffering?
Car insurance companies look at the amount of physical and mental pain a person is in as a result of a car accident and uses these factors to determine pain and suffering amounts. They do this by taking the number of medical bills and multiplying it by the previous amounts for pain and suffering awarded in similar cases. They then add in lost wages and come up with a settlement amount,
Now that you have a good grasp of the ins and outs of how liability car insurance works, it’s time to put your knowledge to the test. If you have any more questions, just stop back by or enter your ZIP code below to get started. Whichever way you choose to go, will be here to help you through it all.