What Is Liability Insurance and What Does it Cover?

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Being a car owner is fun, but it also comes with a lot of responsibility. That’s why liability coverage is the required insurance in most states.
Many states require you to have some form of auto insurance, which can include comprehensive, collision, or liability insurance. But which insurance coverage do you need?
If you’re having trouble understanding the sometimes confusing terminology of auto insurance, you can rely on Jerry to help you find the exact coverage you need. Read on to find out everything you need to know about basic minimum insurance coverage.
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What is liability insurance?

Liability insurance is the most basic insurance coverage. Most states require that you at least have liability coverage, even if your car is paid for. If your car is not paid for, then your insurance company will require you to have some form of comprehensive and collision coverage as well. Your lender will definitely require you to have additional coverage, too.
It’s very important to make sure that you have the required type of insurance when you buy a vehicle, because if you don’t, the consequences could put a big dent in your finances.

What does liability insurance cover?

While comprehensive or collision coverage protects you and your property, liability insurance provides coverage for the other party if you cause an accident.
Liability insurance is broken down into two basic types of coverage: bodily injury liability and property damage liability.
Bodily injury liability insurance pays for any injuries that you or another driver of your vehicle causes as the result of an accident. Your bodily injury liability insurance also covers you if you’re driving someone else’s car with their permission.
Property damage liability provides coverage for any property damage your vehicle causes during an accident. Some of the damage types covered by property damage liability insurance includes damage done to another vehicle, a structure, or other objects located on or near the roadway.
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How do you make a liability insurance claim?

If you’re in an accident and only have liability insurance, the other party or their insurance are the ones who file a claim against your insurance policy. Called a third-party claim, the insurance company for the person at fault will file the claim, usually after an investigation.
Unfortunately, a downside of liability insurance is that it doesn’t always cover the full amount of the medical bills or vehicle damage–or replace a totaled vehicle. In cases like this, the at-fault party will have to be taken to court and sued for damages.

Does liability insurance cover my car if someone hits me?

Another downside to having liability insurance only is that it doesn’t cover any medical costs or property damage suffered by you. If both drivers are at fault in an accident, then the other driver’s insurance should cover some of your costs associated with the accident.

How much liability insurance should you get?

Most states require a minimum amount of liability insurance coverage. The amount you need to carry varies by state.
So, how much liability insurance should you get? Keep in mind that if your insurance is not enough to cover the injured party’s bodily injury and property damage costs, they can take you to court to force you to pay. Also added to this will be any legal costs associated with taking you to court.
If you have assets, such as a home or other property, you need to carry enough liability insurance to protect these assets. Many experts recommend that you purchase at least $100,000 in bodily injury liability coverage per person in an accident and $300,000 for everyone injured per accident.

Find cheap insurance

If you want to save money on car insurance, Jerry is a good place to start. A licensed broker, Jerry does all the hard work of finding the cheapest quotes from the top name-brand insurance companies and buying new car insurance. Jerry will even cancel your old policy for you.
And to ensure you always have the lowest rate, Jerry will send you new quotes every time your policy comes up for renewal, so you’re always getting the coverage you want at the best price. This level of service is why Jerry earned a 4.6/5 rating on the App Store and made it the top insurance app in the country.
“Prior to Jerry I was paying way too much for liability coverage. They did all of the work and then I saw a $100/month price reduction in my insurance cost. I love how quick and easy it was, I’m so grateful!” - Satisfied Jerry Customer

FAQs

Does liability insurance cover my car if someone hits me?

Yes, but not how you might think. The other, responsible party’s liability insurance will cover the cost of repairing your car.

What if someone hits me and they don’t have liability insurance?

It’s illegal to drive without the minimum liability coverage, so the offending party may be held accountable in court, and they’ll have to pay you out of pocket. It’s also a good idea to get uninsured motorist coverage in case you’re in an accident where the other party isn’t insured.
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Haven’t shopped for insurance in the last six months? There might be hundreds $$$ in savings waiting for you.
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Judith switched to Progressive
icon savingsSaved $725 annually
avatar
Alexander switched to Travelers
icon savingsSaved $834 annually
avatar
Annie switched to Nationwide
icon savingsSaved $668 annually

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