What Is Liability Insurance?
Liability insurance pays for damage or injury you cause to other people or their property. In auto insurance, "bodily injury liability" covers the other driver’s medical costs, while "property damage liability" covers their car or a fence you hit. Every U.S. state except New Hampshire requires some form of auto liability coverage.
Why it matters
Liability is the foundation of most policies because the financial risk of being sued after a serious at-fault accident is far larger than the value of your own car.
Common confusion
Liability coverage does NOT pay for your own car or injuries — that needs collision and medical payments coverage.
Frequently Asked Questions
What are state minimum limits?
Each state sets a minimum, often written as three numbers like 25/50/25 (in thousands). These minimums are frequently too low to cover a serious crash, so higher limits are usually wise.
Does liability cover a lawsuit?
Yes, part of your premium pays for legal defense up to the policy limit if you are sued for a covered incident.