Coverage Liability

What is Coverage for Others (Liability) auto insurance? 

That is an excellent question and one of the most important concepts in auto insurance!

"Coverage for Others," or Liability Auto Insurance, is the foundation of any car insurance policy and is required by law in almost every U.S. state. Its primary purpose is to protect you financially if you are at fault for a car accident.

Simply put, it pays for damages and injuries you cause to other people and their property.

🛡️ The Two Parts of Liability Coverage

Liability insurance is made up of two distinct components, which are always purchased together:

  1. Bodily Injury Liability (BIL)
  • What it covers: Medical bills, lost wages, and pain and suffering for the other driver and their passengers if you cause an accident.
  • Also includes: Your legal defense costs if you are sued by the injured party.
  • What it doesn't cover: Your own medical expenses or those of your passengers (you need Medical Payments or PIP for that).
  1. Property Damage Liability (PDL)
  • What it covers: The cost to repair or replace property that you damage in an accident.
  • Examples: The other driver's car, a guardrail, a fence, a mailbox, or a building.
  • What it doesn't cover: Damage to your own vehicle (you need Collision coverage for that).

🔢 Understanding the Liability Limits (Split Limits)

Liability coverage is typically described using three numbers, known as "split limits." For example, a common policy limit might be written as 25/50/25.

Number What it Represents Coverage Type Maximum Payout
First Number (25) $25,000 Bodily Injury Liability Maximum payment for injuries to one person in the accident.
Second Number (50) $50,000 Bodily Injury Liability Maximum total payment for all people injured in one accident.
Third Number (25) $25,000 Property Damage Liability Maximum total payment for damage to all property in one accident.

Why Higher Limits Are Recommended

It is generally recommended to purchase limits significantly higher than your state's minimum. If the total cost of damages and injuries you cause exceeds your policy limit, you are personally responsible for paying the difference. This means your personal assets (savings, house, future wages) could be at risk.

For example, if you have the minimum Property Damage limit and total damage to the other car is, your insurance pays the first, and you are responsible for the remaining $15,000.

Would you like to know the minimum liability insurance limits required in your state?