How Liability Car Insurance Works in the US

Liability car insurance is the mandatory coverage damage you cause to others

Key Point: Liability insurance protects your wallet from lawsuits, medical bills, and property damage claims if you’re legally responsible for an accident.

What Liability Car Insurance Covers

Liability insurance has two major parts:

1. Bodily Injury Liability (BI)

This pays for:

Medical bills of injured people
Lost wages
Pain & suffering
Legal defense if you’re sued

2. Property Damage Liability (PD)

This pays for damage you cause to:

Cars
Buildings, fences, garages
Public property such as streetlights

How Liability Limits Work (Example: 50/100/50)

A liability policy is usually shown as three numbers, like 50/100/50. This means:

50 = $50,000 for bodily injury per person
100 = $100,000 total bodily injury per accident
50 = $50,000 for property damage

Example: If you cause a 3-car accident and the repair damage is $80,000 but your PD limit is $50,000, you pay the remaining $30,000 from your pocket.

State Minimum Liability Requirements

Each state sets its own minimum liability limits. Some states like California and Florida have low minimums, while states like Maine and Alaska require very high limits.

Important: Minimum coverage is often not enough — medical bills and car repair costs can exceed limits easily.

How Much Liability Coverage Do You Actually Need?

Most insurance experts recommend:

100/300/100 for most drivers
250/500/100 if you have a home or valuable assets

Why higher limits? A serious accident can cost $200,000+. Without enough liability coverage, you could face lawsuits, wage garnishment, or asset seizure.

What Liability Insurance Does NOT Cover

Your own car damage (that’s collision coverage)
Your medical bills (that’s MedPay or PIP)
Damage from uninsured drivers (that’s UM/UIM)
Theft or natural disasters (that’s comprehensive coverage)

Who Should Increase Their Liability coverage?

Drivers with new vehicles
Homeowners or business owners
High-income or high-asset drivers
Drivers in high-lawsuit states (CA, TX, FL, NY, NJ)

Best Way to Get Affordable Higher Liability Limits

The easiest way to increase coverage without increasing cost is to compare multiple quotes. Rates vary widely between companies.

Compare Top Liability Insurance Quotes (Free)

See which insurer offers the best rate for 100/300 or 250/500 coverage.

Compare Liability Quotes

Disclaimer: Insurance requirements vary by state. Always confirm with your state regulator before choosing coverage. This article is for US drivers and is updated for insurance trends.