What Is Liability Coverage?

Updated: January 2022

Often the bare minimum legal requirement for insurance, liability coverage, or liability-only, covers the costs of both the medical and property damage suffered by the other person if you cause an accident. Here’s a more in-depth breakdown:

1. Property Damage Liability Coverage: As the name implies, this aspect of liability coverage provides financial coverage for any property damage the other party suffers in an accident. This can include both vehicle damage and structural damage to buildings.
2. Bodily Injury Liability Coverage: This portion of liability-only coverage covers any injuries the other party suffers as a result of the accident. Besides medical expenses, this coverage can also extend to cover lost wages and legal fees.

Liability vs. State Minimum

Many drivers regard liability coverage and state minimum insurance as synonymous. This is actually the case in several states, though the amount drivers are required to purchase still varies significantly. In certain states, however, you might be required to purchase other types of coverage as well, such as uninsured motorist coverage, personal injury protection, or medical payments -- all of which will offer a greater degree of protection that liability alone can.

For drivers in states that only require liability coverage, be aware: the amount of liability coverage these minimums require you to purchase is often simply not enough to cover the fees associated with an accident. While opting for the state minimum might feel great for your wallet at first, a serious accident can quickly get you into debt. Even if we ignore for a moment that liability-only insurance only covers certain types of damages, the property and bodily injury damages of the other party in a major accident will easily cost you well into the thousands, and any amount that your insurance doesn’t cover will have to be paid out-of-pocket. For this reason, we suggest purchasing more than the state minimum if possible.

Is Liability-Only Really Enough?

As we already mentioned, liability-only insurance only provides coverage for the other party when you cause an accident. This leaves you financially vulnerable to all other costs associated with an accident, including any of your own medical or vehicle-repair expenses. While liability-only might be the state minimum where you live and can save you money on monthly premiums, keep in mind that it does not provide full coverage by any means. If you can’t handle the sudden expenses of a serious accident, we recommend purchasing other types of insurance as well. To start, take a look at our guide to full coverage.

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