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What Is Liability Insurance?

Updated: September 2017

Auto liability insurance is a type of car insurance coverage that's required by law in most states. If you cause an accident, liability coverage helps pay for the other person's expenses. There are two types of auto liability coverage that drivers in each state must have: bodily injury liability coverage and property damage liability coverage.

Video Transcript

Explainer Video (2:13): What Is Liability Coverage?

Announcer (voiceover): Liability coverage in your auto insurance policy—no matter which state you live in, it's required at some level. But, do you understand what liability coverage is, and what it protects?

Announcer (voiceover): Liability is usually built from two components: bodily injury and property damage.

Announcer (voiceover): Bodily injury liability coverage helps protect you if you're responsible for an accident that hurts another person.

Announcer (voiceover): Bodily injury liability can help you pay for the other person's medical bills, compensation for loss of income and emergency aid at an accident scene, as well as your legal bills if that person sues you.

Announcer (voiceover): Two limits exist within Bodily Injury coverage: per person and per accident. For example, within a policy you might see a $50,000 maximum payment per person, and a $100,000 maximum payment per accident.

Announcer (voiceover): Then, there's property damage liability coverage, for damage you cause to someone else's property (but not your own). If you hit someone else's car, for instance. Or run into their house or storefront.

Announcer (voiceover): Property damage liability coverage can help pay for structural damage, repair or replacement costs for stationary objects like fences, even vehicle repair or replacement. It can even help keep your assets safe if a covered accident results in a lawsuit.

Announcer (voiceover): On your policy, the per person, per accident and property damage limits are often written like this:

(A hand draws a picture of an insurance policy that says "Limits: Per person, per accident and property damage. 100/300/100")

Announcer (voiceover): An accident can lead to financial responsibilities—so it's a good idea to make sure you carry enough liability coverage to protect yourself.

Announcer (voiceover): So now for a quick overview: Liability coverage = bodily injury + property damage coverage.

Announcer (voiceover): Bodily injury liability coverage can help pay for medical bills and other related expenses if someone else is hurt in an accident you're responsible for.

Announcer (voiceover): And, property damage coverage can help protect your assets and help pay for structural damage, stationary objects and another person's vehicle.

Announcer (voiceover): Have questions? Contact your Allstate agent today.

(Hand writes:


What Is Covered By Liability Insurance?

Auto liability insurance helps cover:

  • Bodily injury. If you're at fault for an accident that injures another person, bodily injury liability coverage helps pay for their medical expenses.
  • Property damage. If you cause an accident that damages someone else's property (their car, for example), property damage liability coverage helps pay for repairs.

Featured Resource

What Does Auto Liability Cover?

Learn about the two types of auto liability coverage and how they may help after an accident.
Click to view infographic.

What Does Auto Liability Cover?

Learn about the two types of auto liability coverage and how they may help after an accident.
Click to view infographic.

Make sure you have the liability coverage you need. Talk to a local agent.

Get a quote > Find an agent >

Liability Insurance Coverage Limits

The amount your insurer will pay for a covered liability insurance claim is subject to the coverage limits you choose. Each state sets minimum coverage limits for bodily injury liability and property damage liability that drivers must purchase, but you may decide to buy additional coverage. You may see three liability coverage limits on your car insurance policy:

  • Property damage liability limit. This is the maximum amount your insurer would pay to repair damage you cause to another party's property. The maximum payout would not exceed the limit you've set.
  • Bodily injury liability limit per person. This establishes a maximum payout for each individual who is injured in an accident that you cause.
  • Bodily injury liability limit per accident. This sets a cap on the total amount that your insurance provider will pay out for all medical expenses other people incur from a single accident you cause. It's important to set this limit at an amount that makes you comfortable, as it may be needed to help pay for the medical expenses incurred by multiple people.

Consider the following: You are at fault for a crash that injured three people in another car. Your bodily injury liability limit per person is $50,000 and your bodily injury limit per accident is $100,000. If Person 1's medical bills total $40,000, Person 2's cost $30,000 and Person 3's cost $25,000, you're likely covered, as each person's bills were under $50,000 (your bodily injury limit per person), and the total cost of injuries is $95,000, which is lower than your $100,000 bodily injury limit for a single accident.

Any costs that exceed your liability coverage limits are your responsibility — in other words, you'd have to pay them out of your own pocket. That's why it may be a good idea to increase your auto liability limits above the state's minimum requirements by purchasing more coverage.

What's Typically Not Covered by Liability Insurance?

Liability coverage typically doesn't pay for damage to your own car after an accident — collision coverage helps with that.

Liability coverage also does not extend to costs associated with your own injuries after an accident you cause. If you want this type of coverage, you may want to consider medical payments coverage.

Need help understanding auto liability insurance or your state's coverage requirements? Talk to a local agent.

This content is for informational purposes only and may not be applicable to all situations.

Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2017 Allstate Insurance Company, Northbrook, IL.
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