What Is Liability Car Insurance Coverage?

Liability auto insurance coverage is the mandatory policy for drivers required by almost all states in the U.S.A. If you damage someone’s vehicle or are involved in a car crash where you’re at fault, your liability auto policy will step in and help you reimburse the damage you cause to other drivers. It not only helps you pay for the repair cost of the vehicle but also covers the cost of injuries and legal expenses if you’re sued by the victim driver.

Example: Let’s say you crash into another car or injure a pedestrian. In this case, your liability coverage for car insurance will pay their medical bills and repair expenses. Plus, if the injured driver files a lawsuit against you, liability auto insurance will pay your legal fees as well.

As we said, almost every state requires drivers to carry it. However, the amount of liability coverage you choose is up to you, and that decision matters more than you might think.,

So, let’s understand liability car insurance in detail in this article.

Main Components of Liability Car Insurance Coverage 

Auto liability coverage has two major parts. Both work together. However, each component protects against different risks. 

1. Bodily Injury (BI) Liability

Bodily injury liability coverage pays when someone else is hurt in an accident you caused. It covers medical bills, lost wages, and even pain and suffering. If the injured party takes you to court, it also helps with legal fees. And if you don’t carry this, it will be considered a legal offense. Plus, you have to pay for all these out of pocket. 

2. Property Damage (PD) Liability

Property damage liability becomes essential when you damage another person’s car or other property. This includes repairs to a vehicle, replacing a fence, or fixing a wall you hit. It can also cover related expenses, like a rental car or towing fees. If there’s a lawsuit, this part of your liability policy covers legal costs too.

What Does Liability Insurance Cover?

If you have read this far, we hope you already understand what liability insurance covers for you. However, in this part, we’ll make it easier and skimmable for you.

So, liability coverage is designed to protect you when you’re at fault in an accident. It doesn’t repair your own car, but it pays for damages and injuries suffered by others. 

Here's what liability car insurance (Both BI and PD) typically covers: 

• Medical bills for injuries caused to others.
• Compensation for lost wages if someone can’t work after the accident. 
• Pain and suffering related to the injuries 
• Repairs another driver’s vehicle 
• Damage to buildings, fences, or other property 
• Costs for rental car while repairs 
• Legal fees if you’re sued for damages

Need liability auto insurance for your newly purchased vehicle? Contact USA Auto Insurance today for affordable car insurance coverage, or call us at (866) 855-1872 to insure your vehicle with same-day coverage.

What Does Liability Insurance Not Cover?

It’s just as important to know what your auto liability coverage won’t handle. Many drivers assume it covers everything, but that’s not true. This protection only applies to the other party’s damages when you’re at fault. Your own losses fall under different types of car insurance coverage.

Here's what liability does not cover:   

• Repairs to your own vehicle after an accident
• Your medical bills or personal injuries 
• Collision coverage needs, like replacing your car after a crash 
• Non-accident risks such as theft, vandalism, or fire (Comprehensive coverage) 
• Expenses tied to an uninsured driver hitting you, unless you add special coverage 
• Medical costs for your passengers without personal insurance

What Are Liability Coverage Limits

Every insurance policy has limits, and liability coverage is no exception. These limits decide the maximum amount your insurer will pay after an accident. And if the amount goes above that limit, you’re responsible for it.

Most auto liability coverage limits are shown as three numbers, like 25/50/20. Each number represents a different cap:

• Bodily injury liability coverage per person: The most your insurer pays for one person’s injuries (usually $25,000 cap).  
• Bodily injury liability coverage per accident: The most paid for all injuries in a single accident (usually $50,000 cap). 
• Property damage liability: The maximum for damage to another person’s car or other property ($20,000 cap).
  

Each state has set a minimum liability coverage limit for drivers, which you have to follow while buying liability insurance coverage. However, some insurance companies also offer a combined single limit, which gives one total pool of money for both bodily injury and property damage liability.

If you’re a high-risk driver, choosing the right liability limit is very important. USA Auto Insurance always recommends carrying more than the minimum coverage limit for drivers with a bad driving history.

How Much Is Liability Car Insurance?

Liability auto insurance costs vary based on several factors. According to our 2025 research, a liability-only policy can range from $45 to $160 per month, or $540 to $1,920 per year.

If you’re in a low-cost insurance state with a good credit score and driving record, you may pay around $45 per month or $540 per year for a liability-only policy. A good driver in a medium-cost insurance state might pay about $100 per month or $1,200 per year for minimum coverage. And if you’re a good driver living in a high-cost state, you can expect to pay around $160 per month or $1,920 per year.

However, please keep in mind that the exact rate could vary by the following factors: 

• State requirements: Each state sets different minimum coverage levels.
• Driving record: Clean history usually means lower liability insurance rates. 
• Age and gender: Younger drivers typically face higher rates. 
• Credit score: In many states, insurers use it to predict risk. 
• Vehicle type: Newer or more expensive cars (e.g., sports cars, luxury cars, antique cars) may raise costs. 
• Coverage Limits: Higher liability coverage limits increase premiums but provide stronger protection. 
• Location: Accident rates, theft levels, and repair costs vary by city or state.

Is Liability Car Insurance Required in All States?

49 out of 50 states require drivers to carry minimum liability car insurance coverage. The only exception is New Hampshire, which requires its drivers to carry proof of financial responsibility to cover an at-fault accident event instead of buying a policy. Some states also require extras like personal injury protection (PIP) or uninsured motorist coverage.  

Minimum Liability Insurance Requirements by State

Each state has different requirements for liability coverage limits. Below is a table showing the minimum liability limits for drivers across all 50 states:

How Does My Driving Record Affect My Liability Coverage?

Your driving record is one of the most important factors when it comes to car insurance. Whether it’s liability or any other type of coverage, it directly affects your insurance costs. A driver with a clean record typically enjoys lower rates for liability or other coverage.

Conversely, a high-risk driver, someone with a history of accidents, speeding tickets, DUIs, or past claims, is more likely to be involved in future incidents, which is why insurers charge them higher rates.

How Much Liability Car Insurance Coverage Do I Need? 

The minimum coverage your state requires is often not enough to fully protect you. Medical expenses and property damage liability costs can soar well beyond those limits after a serious accident.

A good rule of thumb is to choose liability coverage limits that match or exceed your net worth. That way, your savings and assets are shielded if you’re sued. Many drivers opt for higher bodily injury and property damage liability limits for extra peace of mind, even if it means paying a bit more for insurance.

Get a Liability Insurance Quote with USA Auto

Whether you need liability insurance or any type of car coverage, USA Auto makes sure you have the most reliable options available. Our expert insurance agents are here to guide you every step of the way and help you find the coverage that fits your needs. Call us at (866) 855-1872 to get your quote today.

Frequently Asked Questions (FAQs)

What is the difference between full coverage and liability-only car insurance? 

Liability-only pays for others’ injuries and property damage if you’re at fault. Full coverage includes liability plus collision coverage and comprehensive, which protects your own car too. 

What is business liability insurance? 

It protects businesses from claims of bodily injury, property damage, or lawsuits. It’s separate from car insurance coverage and tailored for companies.

What about general liability insurance? 

It’s a broad policy for businesses. It covers third-party claims like accidents, injuries, or damage linked to normal operations.

Can I drive with just liability insurance? 

Yes, if your state requires only liability. But remember, it won’t pay for your own car’s repairs.

Does liability cover my car if someone hits me? 

No. Liability insurance only pays for others. To protect your car, you need collision coverage or uninsured motorist protection.

Can I raise my liability coverage later?

Yes. You can increase your liability coverage limits anytime by contacting your insurance agent.

What is the rule of thumb for liability insurance? 

Pick coverage that equals or exceeds your net worth. That way, your assets stay safe if costs go beyond your policy. 

What isn’t covered by liability insurance? 

Your own medical bills, car repairs, theft, vandalism, or non-accident risks. For that, you’ll need other types of coverage. 

Will liability insurance cover rental cars? 

Usually, yes, if you damage someone else’s car or property while driving the rental. But it won’t cover damage to the rental itself. 

What does liability insurance cover if you're not at fault?

If you’re not at fault, the other driver’s auto liability insurance should pay. Your policy steps in only if you caused the accident.