Liability car insurance definition and basics

Liability insurance coverage protects other drivers from bodily injury or property damage you might cause in an at-fault accident. Liability insurance is also known as third-party insurance. We'll review liability insurance thoroughly in the following guide, answering the following questions:

  • What does liability insurance cover?
  • How much liability auto insurance should you have?
  • How much does liability car coverage cost?

Liability coverage is defined by two key coverages: bodily injury and property damage liability. The amount of liability coverage you carry depends on personal preference and laws in your state. Because car insurance is regulated at the state level, each state sets minimum policy limits for liability coverage.

Basic liability car insurance options look like this:


50 /100 / 50
$50,000 in bodily injury coverage per person$100,000 in bodily injury coverage per incident$50,000 in property damage per incident


What doesn't liability insurance cover?

While liability insurance is mandatory in most states, it’s not the only coverage you should carry.

Some things aren't covered by liability insurance:

  • Collision Coverage: If you drive a valuable vehicle, i.e., worth more than $4,000, consider adding this coverage to protect your vehicle from damage by striking a fixed object (such as a wall or another vehicle)
  • Comprehensive Coverage: Usually paired with collision coverage, comprehensive coverage protects your vehicle from incidents not covered by collision coverage. This includes theft, vandalism, or animal damage.
  • Uninsured/Underinsured Motorist Coverage: This coverage protects you and your vehicle from damage done by a driver without insurance — or someone with insufficient insurance. Like liability coverage, it is broken down into property damage and bodily coverage options. This coverage can also apply if you're injured by a hit-and-run driver.
  • Personal Injury Protection (PIP): This add-on provides assistance for medical expenses and work-loss coverage after an accident, independent of fault. If you don’t have health insurance, PIP is worth considering. This insurance policy is commonly coupled with no-fault insurance.


How much liability insurance do you need?

Each state has its own mandatory liability insurance minimums. While we’ve listed mandatory minimum liability insurance by state at the end of this section, it's often a good idea to carry more than the minimum. Although you might save a few bucks by dropping coverage, it's not recommended to maintain a low level of liability car insurance coverage because:

  • You are responsible for any remaining damage not covered by your insurance
  • You appear as high-risk to insurance companies

You’re responsible for damages not covered by your property damage liability coverage:

Because some states have very low liability limits, you end up being responsible for any damage not covered by your insurance. Let's say you’re a California resident who totals another driver's 2019 Ford F150 — listed at $28,155 — in an at-fault accident. In California, mandatory minimum liability car insurance covers $5,000. You would be responsible for the remaining $23,155. Depending on your financial situation, this could be a tricky hole to climb out of without sufficient levels of property damage liability coverage. 

You appear as a risk to insurance companies:

Carrying your state’s minimum liability coverage not only leaves you on the hook for any damages left over from a claim, but also stands out as a red flag for insurers. If you elect to carry high liability limits, you shoulder some of the insurance company's financial responsibility and risk. If you carry the bare minimum liability car insurance, you pass more risk along to the insurer — leading to more expensive premiums, in many cases. 


6mo with State Min Bi Limits6-mo with 50/100 Bi Limits6-mo with 100/300 Bi Limits


To avoid higher rates, consider keeping your liability coverage at 100/300/100, if possible.

How much does liability car insurance cost?

The price of liability insurance depends on several factors. Based on the US average with a standard vehicle and driving profile, the cost difference between minimum liability limit coverage and "full coverage" is approximately $180 per year. 


State Minimum50/100 Limits100/300 Limits

While your liability coverage comprises half of your premium if you also carry collision and comprehensive coverage, there’s less difference between common liability limits. 


 State-by-state minimum liability limits



 Bodily Injury: Per Person  Bodily Injury: Per Accident  Property Damage 
 New Hampshire $25,000$50,000$25,000
New Jersey$15,000$30,000$5,000
New Mexico$25,000$50,000$10,000
New York$25,000$50,000$10,000
North Carolina$30,000$60,000$25,000
North Dakota$25,000$50,000$25,000
Rhode Island$25,000$50,000$25,000
South Carolina$25,000$50,000$25,000
South Dakota$25,000$50,000$25,000
Washington DC$25,000$50,000$10,000
West Virginia$20,000$40,000$10,000
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