How Much Liability Insurance Do I Need?

When you’re shopping for car insurance, there are important coverage selections you will need to make for your policy—like how much liability coverage you’d like to carry.

Making sure you’re including enough coverage—and the right coverages—to protect yourself financially is an essential part of building a car insurance policy that’s the perfect fit for you.

In this guide, we’ll dive into the ins and outs of liability insurance coverage—including the types of coverages that make up liability insurance, liability car insurance limits, and if liability insurance is required in your area—to help you get a better sense of how much liability insurance you might need.

What Is Liability Car Insurance Coverage?

Liability car insurance coverage can help pay for injuries to other people and their property if you’re found at fault in a car accident. It can help protect you financially from the expenses related to someone’s injuries or property repair expenses resulting from any damages you may have caused while driving.

Liability car insurance coverage is made up of two parts: bodily injury liability coverage and property damage liability coverage.

Bodily Injury Liability Coverage

Bodily injury liability helps cover other people’s medical bills and lost wages if they’re injured in a car accident where you are found at fault.

For example, if you are at fault in an accident that results in the other driver needing medical help for a broken wrist, your bodily injury liability coverage can help pay for their medical expenses.

It’s important to note that if you’re injured in a car accident that you caused, your bodily injury liability does not cover your medical costs. This coverage is specifically designed to cover other drivers who are injured in an accident where you’re found at fault. However, if you’d like additional coverage for your own medical costs, depending on the state you live in, you might be able to add additional medical coverage to your policy, like personal injury protection (PIP) coverage, first-party benefits (FPB), or medical payments (MedPay) coverage.

Property Damage Liability Coverage

Property damage liability covers other people’s property—like a vehicle, fence, or building—if it’s damaged in an accident where you are found at fault.

Let’s say, for example, you’re driving to work on an icy winter morning. You swerve on a narrow road and hit a brick mailbox, causing some damage. Your property damage liability coverage can help pay for repair of the mailbox.

Typically, property damage liability does not cover damage you cause to your own property or vehicle in an accident. But comprehensive and collision coverages are designed to help you repair or replace your vehicle when it’s damaged in a covered incident—no matter who’s at fault.

Is Liability Car Insurance Required?

In most states, liability car insurance is required for all drivers, with a few exceptions.

Your state’s laws set the required minimum liability car insurance limits that all drivers in your state must carry.

However, many often find that the state-required minimum liability coverage isn’t enough—especially in the case of a high-cost car accident where you’re found at fault. (More on this later!)

What Are the Liability Car Insurance Limits?

Liability coverage will only pay for damages up to the maximum amount according to your policy. This maximum amount is called your coverage limit. You determine your coverage limit when purchasing your car insurance policy.

Liability coverage selections are important because any financial damages that fall beyond your liability limits will not be the responsibility of your insurance company, leaving you responsible for paying them out of pocket.

So when you’re choosing your liability coverage limit, it’s important to consider how much coverage you might need to protect yourself financially in the event of a high-cost car accident. If you need help navigating how much liability coverage is right for you, talk with an experienced insurance agent.

Now let’s dive into the ways liability coverage limits are typically split in a car insurance policy.

The 3 Main Split Liability Limits

There are three primary split liability limits that make up your liability car insurance coverage:

Bodily injury liability limits per person
Bodily injury liability limits per accident
Property damage liability limits per accident

When you’re shopping for car insurance, you’ll select coverage limits for these three liability limits.

Bodily Injury Liability Limit per Person

The per-person bodily injury liability limit is the maximum amount your insurance policy will pay per person for others who are injured in an accident where you are found at fault.

For example, if your bodily injury liability limit per person is set at $25,000 per person and $50,000 per accident, $25,000 is the most your insurance policy will cover for each injured person’s medical expenses, lost wages, and sometimes mental health therapy or funeral costs (in the unfortunate event of a fatality).

Let’s take a closer look at how a $35,000 per-person coverage limit would work in the event of an accident where you are found at fault.

If you cause an accident where two other drivers are injured, their injuries may result in different expenses. If one of the drivers has an injury that results in $18,000 in medical bills, while the other has $32,000 in combined medical bills and lost wages, your per-person bodily injury liability limit would cover the first driver’s expenses entirely and would cover $25,000 of the second driver’s expenses. This means you would be responsible for paying the remaining $7,000 in costs (that extend outside of your bodily injury liability limits for your policy) out of pocket.

Bodily Injury Liability Limit per Accident

The per-accident bodily injury liability limit is the maximum amount your insurance policy will pay out in total for the injuries you cause to other drivers, per covered accident.

To better understand how this limit works, let’s get into another example and break it down. (Buckle up—this one’s going to have quite a few numbers.)

Okay, ready for some car insurance math?

In this scenario, let’s say Armando is a careful, experienced driver and his bodily injury liability coverage limits are $100,000 per person and $300,000 per accident.

Armando was driving home when a severe storm hit, and he rear-ended a driver in front of him and was found at fault. The driver had multiple passengers who were also injured, and the accident resulted in the following expenses:

The driver of the vehicle experienced $75,000 in medical expenses, including physical therapy for a back injury.
Passenger A experienced no physical injuries but incurred $2,500 in costs for mental health counseling due to the traumatic event.
Passenger B sustained minor injuries, but they missed time at work due to the physical requirements of their profession. Their medical expenses and lost wages amounted to $55,000 total.
Passenger C experienced time in the hospital and received surgery, but they are on their way to a full recovery. They experienced $98,000 in medical expenses and lost wages from the accident.

In this scenario, the total bodily injury expenses amounted to $230,500. Because none of the injured individuals incurred covered expenses beyond the $100,000 per person limit, and the total accident expenses did not exceed Armando’s bodily injury liability limit per accident of $300,000, Armando will have no out-of-pocket financial expenses for bodily injury expenses.

Property Damage Liability Limit per Accident

Most of the time, property damage liability coverage offers a single coverage limit option per accident, unlike bodily injury coverage, which has separate per-person and per-accident limits.

Here’s how a per-accident property damage liability limit works.

Let’s say you’re a driver in the Lone Star State and you carry the minimum amount of state-required car insurance coverage in Texas: $30,000 per person, $60,000 per accident in bodily injury coverage, and $25,000 in property damage liability coverage per accident.

You are found at fault in an accident with two other vehicles. No drivers are injured and your vehicle wasn’t damaged, but the other drivers’ vehicles have been damaged. Here is a breakdown of the total damages:

Vehicle #1 is a large, brand-new SUV and needs $15,000 in repairs.
Vehicle #2 is a mid-size sedan that’s considered a total loss and is no longer driveable due to the incident. Its replacement value is $17,500.

The total cost of property damage that resulted from this accident adds up to $32,500.

Because your car insurance includes a property damage liability limit per accident of $25,000, your insurance policy will be responsible for $25,000 of the property damage, and you will be responsible to pay the remaining $7,500 out of pocket.

What Is Not Covered by Liability Insurance?

Not everything that could happen in a car accident is covered by liability insurance—in fact, liability insurance is only one of the main components of a car insurance policy. (Talk to an insurance agent or get a car insurance quote to determine what coverages are right for you.)

Here are some things that aren’t usually covered by liability insurance, regardless of your liability coverage limits:*

Damage to your vehicle from an accident
Damage to or loss of your vehicle caused by theft, vandalism, civil disturbances, or fires
Replacement or repair of your vehicle due to storm damage or natural disasters, including things like hail, flooding, wildfires, hurricanes, animals, and fallen trees.
Damage caused by not maintaining your vehicle
Wear and tear due to regular use of your vehicle

Some of the situations above may be covered by other car insurance coverage types, like comprehensive and collision coverage, while others might not be covered by car insurance at all. If you have questions about what your specific car insurance policy covers (or doesn’t cover), check with your insurance company or agent.

*This list isn’t exhaustive. Check with your car insurance company or licensed insurance agent to determine what is and isn’t covered by your insurance policy.

What Happens If I Total My Car and Only Have Liability Insurance?

If your car is totaled in an accident and you only have liability insurance coverage, in most cases you’ll be financially responsible for the full costs to replace your vehicle.

Let’s check out another example.

Let’s say A.J. lives in Utah. They carry the state-required minimum liability coverage for Utah: $25,000 per person, $65,000 per accident for bodily injury, and $15,000 per accident for property damage.

A.J. is found at fault in an accident with one other driver. No one was injured, but the other vehicle sustained $10,000 worth of damages, and A.J.’s car was totaled in the accident.

A.J. carries the state-required coverages only, and they don’t have comprehensive and collision coverage on their car insurance policy. (Comprehensive and collision coverages are designed to help replace or repair your vehicle if it’s damaged in a covered accident—no matter who’s at fault.)

In this case, A.J. would be financially responsible for replacing their own vehicle (since they don’t carry comprehensive and collision coverages), but their car insurance policy would cover the $10,000 of damages to the other driver’s vehicle.

How Much Liability Insurance Do You Need?

When deciding how much liability insurance you need, there are a few important things to consider:

Your state’s minimum requirement for liability car insurance
Your risk tolerance level
The financial assets you’d like to protect, like your savings or home

To drive legally in your state, you’ll need to carry at least your state’s required minimum for bodily injury and property damage liability coverage.

And even if you live in a state where it’s not required, choosing to purchase liability coverage as part of your car insurance policy can help protect you financially.

Essentially, the less liability coverage you carry, the more financial risk you’re agreeing to take on personally in the event of an accident where you’re found at fault.

If you’re wondering how much liability coverage might be right for your situation and budget, you can get a quick, no-obligation quote with Clearcover and check your price today. If you’re looking for a little more hands-on guidance, connect with a licensed insurance agent who can help you determine what coverage amounts best fit your needs.

What Is the Cost of Liability Car Insurance?

The cost for liability car insurance coverage depends on a few factors, including:*

Your driving history
Your driving habits and commute length
Your vehicle make, model, and type
Discounts you might be eligible for

*This list isn’t exhaustive. Factors that influence insurance costs can vary by state.

While you might be able to find the average estimated cost of liability car insurance through a quick web search, each car insurance policy is uniquely developed for the driver who holds it, and selecting the cheapest car insurance doesn’t always mean you’ll have the right amount of coverage for your needs.

Your cost of liability coverage will be unique to you and your coverage limit selections. The best way to determine what you’d pay is to get an individualized car insurance quote.

Get Reliable Liability Insurance with Clearcover

Getting the right amount of liability car insurance coverage can be tricky to navigate, but we’re here for you every step of the way.

At Clearcover, we built smarter, tech-based car insurance to make your car insurance experience clear, easy, and hassle-free. And with our easy-to-use award-winning app, everything you need to manage your policy, file lightning-fast claims, and more, is all in the palm of your hand. Take control of your coverage and see what you can save by switching to Clearcover today.

Examples provided in this article are fictional and are for illustrative purposes only.