Property Damage Liability Insurance: 2022 Guide
what is property damage liability insurance?
Property damage liability insurance is a type of auto insurance coverage that pays for damage you cause to someone else’s property, such as your car or home, as a result of an accident. Property damage liability coverage is one of two types of auto liability insurance and is required in most states.
what property damage liability insurance covers
- Damage to other automobiles caused by the policyholder’s vehicle.
- damage to any stationary structure or object, including houses and fences, caused by the policyholder’s vehicle.
- a set maximum dollar amount of damages per accident.
Property damage liability insurance never covers damage to the policyholder’s vehicle or property. to cover repairs to their own vehicle, the policyholder would have to use collision or comprehensive coverage.
how property damage liability works
Property damage liability serves as a portion of liability insurance along with bodily injury liability. If you are at fault in an accident, the other driver files a claim with your liability insurance policy. Your property damage liability insurance pays for property damage expenses, such as damage to your vehicle. your medical bills are covered by your bodily injury liability insurance. Liability insurance may also cover your legal fees if you are sued because of an incident.
Although liability insurance is designed to pay for the victim’s accident-related expenses, your insurance company does not write a blank check to cover the victim’s needs. the amount the insurance company will pay is determined by the policy limits.
Liability insurance policies are described as either a single limit combination policy or a split limit policy. Single limit combination policies do not differentiate coverage limits between property damage and bodily injury liability, while split limit policies specify how much coverage is available by type of liability insurance.
Learn more about how property damage liability works.
minimum state property damage insurance requirements
Most states require drivers to carry at least a minimum amount of bodily injury and property damage liability insurance. The map below shows the minimum amount of property damage liability insurance each state requires per accident.
minimum coverage requirements are per accident and were last updated February 2022
Note that some states give you the option to waive auto insurance if you have enough assets to “self-insure.” In these states, you may be required to put down significant funds that could be used if you caused an accident or post a bond. If you, like the vast majority of drivers, choose not to “self-insure,” then you must at least meet the minimum requirements above.
how much does property damage liability insurance cost?
In general, the cost of property damage liability insurance depends on how much you buy. the higher your limits, the more expensive your coverage will be.
The following table provides an example of the average additional cost drivers in Los Angeles may incur annually if they increase their property damage liability limits above a baseline of $10,000.
additional annual cost for additional coverage
note: average calculated from quotes from multiple insurance providers for a 37 year old woman with excellent credit in zip code 90001 who drives a 2008 honda accord. *monthly cost also includes $50,000/$100,000 liability insurance civil for bodily injury and collision and comprehensive insurance with deductibles of $500.
How much property damage liability insurance should I buy?
We recommend that you purchase the maximum amount of property damage coverage you can afford. The ultimate goal should be to purchase limits that are equal to your net worth, which will protect your assets if you are sued. If your net worth is particularly high, you can supplement your property damage liability limits with a personal umbrella policy.
Most state requirements for property damage liability insurance are relatively low, and if property damage costs exceed your coverage limits, you are financially responsible for paying the remaining balance. in that case, the other party can sue you, putting your savings and assets at risk.
learn more about the amount of property damage liability insurance you should have.
