Liability car insurance pays for bodily injury (BI) and property damage (PD) that you legally cause to other people and their property, up to your policy limits. It is required in 49 states and D.C.; New Hampshire is the exception, though financial-responsibility rules still apply (AAA Digest of Motor Laws; New Hampshire DMV). Liability does not pay to repair your own vehicle or your own medical bills; those are typically addressed by collision, comprehensive, and medical coverages (Insurance Information Institute).
The first reason for getting coverage is legal compliance. States set minimum BI/PD limits and enforce penalties for driving uninsured. Recent changes underscore how dynamic these rules are: California increased its minimums to 30/60/15 on January 1, 2025 (and will raise them again to 50/100/25 in 2035) (California DMV); Virginia eliminated its uninsured motor vehicle fee in 2024 and now requires insurance statewide, with minimums of 50/100/25 effective January 1, 2025 (Virginia DMV); and Florida uniquely requires $10,000 Personal Injury Protection (PIP) and $10,000 Property Damage Liability (PDL) statewide while BI liability is not universally mandated (Florida Highway Safety and Motor Vehicles). Specific penalties and proof filings vary by state, but the common thread is that maintaining at least the state minimum liability limits is required in nearly all jurisdictions.
The second reason is financial protection. Crashes are expensive, and liability coverage helps prevent you from paying others’ losses out of pocket. According to NHTSA’s latest comprehensive study of 2019 crashes, the economic cost of motor-vehicle crashes was $340 billion nationwide—about $1,035 per U.S. resident—and the broader comprehensive (societal) harm that includes lost quality of life was $1.37 trillion (NHTSA technical report). Economic costs include direct medical care and emergency services, lost workplace and household productivity, property damage, travel delay/congestion, insurance administration, and legal/court costs; comprehensive costs add the value of pain, suffering, and lost quality of life (per USDOT benefit–cost methods). For present-day context, scaling NHTSA’s 2019-dollar totals by CPI implies roughly $410–$430 billion in economic costs and about $1.65–$1.75 trillion in comprehensive harm in 2025 dollars (approximate CPI conversion; BLS CPI-U). For methodological background, see the 2015 report by the National Highway Traffic Safety Administration.
Elements of liability insurance
- Bodily injury liability per person – The maximum your insurer will pay for each injured person you legally harm in a crash. Eligible expenses typically include medical care, ambulance and emergency services, rehabilitation, and lost wages, up to the per-person limit. States set minimum per‑person amounts (commonly $15,000–$50,000), but many consumers choose higher limits to reflect modern medical and legal costs (IIHS state minimums; III guidance).
- Bodily injury liability per accident – Caps the total BI payout for all injured parties in a single accident. For example, a “split limit” of 25/50/25 means up to $25,000 BI per person, $50,000 total BI per accident, and $25,000 PD per accident. Many households step up to 100/300/x or use a combined single limit (CSL) such as $300,000 for more flexibility across BI and PD (III on split vs. CSL).
- Property damage liability per accident – The maximum your insurer will pay for others’ property you damage (vehicles, buildings, fences, signage). With today’s vehicle repair and replacement costs, lower PD limits (e.g., $10,000–$25,000 minimums in some states) can be exhausted quickly; many experts recommend higher PD limits or a robust CSL to avoid personal exposure (IIHS; NAIC consumer guide). Damage to your own vehicle is not covered by liability.
What isn’t covered in liability insurance?
- Your damaged car – Liability won’t pay to repair or replace your own vehicle after a crash; that’s what collision coverage is for. Non‑collision perils (theft, hail, flood, fire, vandalism, animal strikes) are handled by comprehensive coverage (Insurance Information Institute).
- Your medical bills – Liability doesn’t pay your injuries. Consider Medical Payments (MedPay) or, in no‑fault states, Personal Injury Protection (PIP), which can also cover lost wages and essential services (NAIC).
- Outside damage factors – Weather and other non‑crash hazards (hail, flooding, fire, theft, vandalism) are not covered by liability; comprehensive coverage addresses these perils (III).
- Theft of your vehicle – Auto theft is a comprehensive claim. If theft risk is elevated where you live or park, comprehensive with an appropriate deductible is advisable; ask about anti‑theft discounts (NICB Hot Spots).
- Your rental car costs – Liability doesn’t include substitute transportation. Rental reimbursement or rideshare credits are optional add‑ons that can help while your car is in the shop; these have become more valuable as repair cycle times and length of rental remain elevated (Enterprise LOR trends).
- Diminished value – Cars that have been in accidents can lose market value, even after repair. If your car suffers diminished value, that would not be covered under liability insurance.
How much liability car insurance should you get?
Start with your state’s legal minimums, then consider higher limits to match today’s medical, legal, and repair realities. Several states have recently increased minimums (e.g., California to 30/60/15 in 2025; Virginia to 50/100/25 in 2025), and many consumers select at least 100/300/50 or a robust CSL for stronger protection (CA DMV; VA DMV; III). If your vehicle is financed or leased, your lender will typically require collision and comprehensive as well (NAIC).
Some questions to look at that may help include:
- How often do I drive? The more you drive, the more opportunities you have to be in an accident. If you drive rarely or don’t own a car, you may look into less covered or non-owner car insurance. Low‑mileage drivers should also consider telematics‑based or pay‑per‑mile programs that price on miles and driving behavior, which many shoppers adopt for savings (J.D. Power; III on UBI; LexisNexis 2024).
- How experienced of a driver am I? If you’re new to driving, crash risk is higher—especially for teens and at night. Consider higher liability and UM/UIM, and look at telematics with coaching features (CDC on teen drivers; IIHS night driving).
- What other assets do I have? You’ll want to look at what other assets you have that you could use if you caused an accident and needed to come out of pocket. Things like cash reserves, savings and cars you own should be taken into account. Many households choose at least 100/300/50 or a high CSL, and some layer an umbrella policy for additional protection (III).
- Where do I live? Certain areas with more dangerous roads might be somewhere that more coverage is a smart idea. In no‑fault states, PIP is typically required; some states mandate or strongly encourage UM/UIM. Florida, for example, requires PIP and PDL statewide even when BI isn’t universally mandated (AAA Digest; FLHSMV).
Ultimately, the decision of how much insurance to get is up to you. Higher limits increase premium, but they materially reduce the chance you’ll pay out of pocket after a serious crash. To manage costs without sacrificing protection, consider usage‑based discounts if you drive safely/infrequently and select deductibles you can afford for collision/comprehensive; add medical (MedPay/PIP) and UM/UIM where appropriate (III on telematics; NAIC).
What’s the difference between full coverage and liability?
Liability car insurance coverage is the most basic form of car insurance that you can get. In many states, it’s the type of coverage that is required. When you start to add to this coverage, you move into what is known as full coverage. In practice, “full coverage” isn’t a policy type—it’s shorthand for a package that includes liability plus collision and comprehensive to protect your own car; lenders and lessors usually require these on financed/leased vehicles, and some states also require PIP and/or UM/UIM (Insurance Information Institute; Texas DOI Insurance 101; NAIC).
Full coverage refers to policies that generally combine liability coverage, collision coverage, and comprehensive coverage. Collision coverage covers your car costs in case it gets damaged or into an accident. Where liability covers the other driver’s cars, collision covers you. Comprehensive coverage takes care of your car if there is damage from any other non-collision factors like weather, theft, fire, or vandalism.It’s imperative that when you choose your policy, you find the best insurance coverage that most fits your needs. Adding the elements that bring your policy to full coverage can be great, but it will add to your monthly insurance costs. Broad market comparisons show that liability+collision+comprehensive commonly costs about twice as much (or more) as liability‑only, depending on state, driver, vehicle, and deductibles (Bankrate 2025; NerdWallet 2025). Strengthen your package with UM/UIM and MedPay/PIP where available—especially in areas with many uninsured drivers or if your health plan has high deductibles (NAIC). Consider modern add‑ons that address today’s repair realities and cycle times—rental reimbursement, OEM parts endorsements, and glass/ADAS calibration coverage—given elevated repair complexity and longer rentals (CCC Crash Course; Enterprise LOR). EV owners in particular may see higher collision claim severity and should ensure adequate comprehensive, roadside/towing, and rental benefits (HLDI).
