Cost And Coverage" width="100%" height="145px" />As a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Written By Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Lead Editor, Insurance Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
| Deputy Editor, Insurance
Updated: Sep 5, 2023, 12:01pm
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Cost And Coverage" width="100%" height="145px" />
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While a good car insurance policy is made up of several types of coverage, liability car insurance is the foundation. It’s required in most states and is usually the most expensive portion of a policy.
It’s also a coverage you don’t want to skimp on. If you don’t buy enough liability coverage, you could be setting yourself up for financial disaster if your car insurance can’t cover all the bills of a car accident you’ve caused.
Liability insurance pays others when you’re at fault for a car accident that causes bodily injury or property damage. Liability insurance also pays for legal-related costs if you’re sued because of a car accident. These costs include your legal defense and judgments and settlements that arise out of a lawsuit.
Here are examples of when liability coverage comes into play:
Liability car insurance covers you when you are in a car accident that results in bodily injury or property damage to others. There are two components to liability car insurance:
Liability car insurance has coverage limits, which is the maximum that your insurer will pay out for bodily injury and/or property damage to others if you are at fault in a car accident.
You can choose your liability limits. Most states require a minimum level of liability coverage, but it’s usually not enough to properly protect you if you’re in a crash.
Liability car insurance limits are typically shown as a series of three numbers. For example, you might see it written as 15/30/5. The first two numbers are for bodily injury coverage and the third number is for property damage coverage. For example, here’s what 15/30/15 means:
Liability limits of at least 100/300/100 are much better, and you may want even higher limits if you have a lot to lose in a car accident lawsuit. 100/300/100 means:
Remember, liability insurance pays others. It does not cover your own injuries or damage to your vehicle.
Liability insurance doesn’t cover everything. For example, it doesn’t pay to repair your own vehicle or replace your car if a thief steals it. Other types of car insurance can cover those issues.
Your car insurance liability limits—which is typically as much as $500,000 for bodily injury liability— may not be enough if you cause an auto accident that results in extremely expensive repairs and medical bills for others, or a high-dollar lawsuit payout.
To get an ample amount of liability insurance, consider buying an umbrella insurance policy. Umbrella insurance provides additional liability coverage of $1 million and up. When your liability car insurance is exhausted, umbrella insurance kicks in. You can typically buy $1 million in coverage for around $150 to $300 per year, according to the Insurance Information Institute.
The cost of liability insurance is based on several factors, including:
Auto insurance rates vary widely among companies because they all have their own way to calculate rates. You might be able to find the cheapest liability-only car insurance for a much better price when shopping around. That’s why it’s a good idea to compare car insurance quotes from several companies.
Source: Quadrant Information Services. Rates are based on liability coverage of 100/300/100. Your state may require other coverage types not shown here that will affect your car insurance cost, such as uninsured motorist coverage.
Every state has some form of financial responsibility law, meaning you show you can pay if you or someone else driving your car causes a crash. Most drivers satisfy this requirement by purchasing car insurance. It’s usually the easiest and most affordable option.
If you don’t want to buy liability car insurance, your state might require you to post a bond to show financial responsibility. The cost of a bond can run upward of $50,000, depending on your state.
Drivers in New Hampshire are not required to buy car insurance in many cases. But you must be able to demonstrate financial responsibility if you cause a car accident.
Other instances where you’ll be required to buy car insurance in New Hampshire are:
Even without an insurance requirement, buying auto insurance is a smart way to protect yourself from accident costs. If you decide to buy a policy, you need to purchase at least 25/50/25 in liability car insurance in New Hampshire.
South Carolina allows qualified car owners to register as uninsured motorist by paying a $600 uninsured motorist fee. That permits you to drive an uninsured vehicle on South Carolina roadways.
Paying the uninsured motorist fee in South Carolina instead of buying car insurance is not recommended. You’ll be held personally responsible if you cause an accident and may have to pay for others’ injuries and property damage. If you buy car insurance in South Carolina, you’ll need at least 25/50/25 of liability coverage.
Drivers in Virginia can pay a $500 uninsured motor vehicle fee to skip car insurance. But if you cause an accident, you’ll still be personally liable for injuries and property damage, meaning you could be stuck paying for injuries and property damage.
If you decide to buy car insurance in Virginia, you’ll need to buy a minimum of 25/50/20 in liability car insurance.
A general rule of thumb is to buy enough liability insurance to cover what you could lose in a lawsuit, based on your assets. Here’s why:
Let’s say you buy your state’s minimum car liability insurance of 15/30/5 and you cause an accident that injures multiple people and results in $100,000 in medical bills. Your insurer will pay $30,0000, and you would be responsible for the remaining $70,000.
However, if you purchased a car insurance policy with higher liability limits of 50/100/50 or 100/300/100, your liability coverage would fully cover the $100,000 in medical bills.
Source: Insurance Information Institute
How much liability insurance you need depends on where you live and what you have to lose. Here’s what to consider when buying liability insurance for your car.
Most states require a minimum amount of liability car insurance. But the state minimum may be inadequate for your specific needs.
For instance, Texas state minimums are 30/60/25. In that case, you need at least $30,000 in bodily injury coverage per person per accident, $60,000 in bodily injury to more than one person per accident and $25,000 in property damage per accident. That’s likely not enough to protect your assets such as your home and savings account.
One thing that should influence your liability coverage is how much you could lose in a lawsuit.
For example, if you own a home and savings, you will likely want to buy liability insurance that is well above your state’s minimum requirement. If you do not have enough car liability insurance, your assets could be at risk if you cause a car accident that results in substantial damage or injuries.
Liability insurance is a vital part of your auto insurance coverage. It’s not a good place to skimp.
A better strategy for saving money to look elsewhere for ways to save on your policy. For instance, ask the insurance company how much you would save by increasing your deductible on collision and comprehensive insurance.
The insurance deductible is the amount that is deducted from your insurance claims check if you make a collision or comprehensive claim. The higher your deductible, the less you’ll pay in premiums. But make sure you can cover a higher deductible amount if you need to make a claim.
You could also ask your insurance agent about car insurance discounts. You may qualify for discounts that you’re currently not getting.
Another good discount is a multi-policy discount. That’s when you bundle your auto and home insurance policies. It’s typically one of the best discounts you can get.
If your car isn’t worth much, you might want to skip buying collision and comprehensive car insurance. These are two separate coverage types that are often sold together. Collision covers your vehicle damage if it’s damaged in a crash with another car or object (like a fence). Comprehensive covers your vehicle for problems like fire, flood, hail, vandalism, falling objects, collisions with animals and car theft.
You’ll most likely be required to have both collision and comprehensive insurance if you have a car loan or lease.
With so many choices for car insurance companies, it can be hard to know where to start to find the right car insurance. We've evaluated insurers to find the best car insurance companies, so you don't have to.
