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What is property damage liability?

Property damage liability is an essential part of your auto insurance policy. It provides you with an additional level of financial protection in case you’re found to be at-fault for an accident. Find out what property damage liability insurance is and what it covers in this article.

What is property damage liability?

Property damage liability is a required component of a car insurance policy. It covers damage you cause to another vehicle or someone else’s property while driving. For example, if you were to rear-end or sideswipe another vehicle, or back into your neighbor’s mailbox, property damage liability may cover the repairs and replacement of these objects, up to the coverage limit you chose for your policy. Each state has its own minimum requirements for property damage liability, although you can choose to have higher limits as well. Generally, the more coverage you have, the more financial protection you have because you minimize your chances of paying out of pocket if you damage someone else’s property. 

How does property damage liability work?

If you’re at fault in a car accident, your insurance company would pay for the other party’s repairs up to your coverage limit. If the damages are estimated to be above your coverage amount chosen, you would need to cover the rest out-of-pocket. Alternatively, if you have an umbrella insurance policy, you could tap into that once your auto insurance liability has hit its limit. If your insurance cannot cover the costs of damages, the injured party could sue you for your personal assets to cover the missing costs. 

How much property damage insurance do I need?

Your car insurance policy must meet your state’s minimum requirements. But even with the minimum required amount, you could put yourself at financial risk without a higher coverage limit, especially since property damages could quickly exceed minimum limits. If you total someone’s car and it’s valued at more than your property damage liability limit, you could be sued for the remaining balance. For this reason, having a higher amount generally provides better protection against financial loss.

How do you file a property damage liability claim?

Property damage liability claims are filed by the individual who incurs the damage. These are the common steps when you will take to file a claim against a driver who has damaged your property.

  1. Exchange insurance information: When the accident occurs, follow proper protocol for your state for notifying the authorities or emergency services as necessary. Also, get the insurance and contact information from the at-fault driver. Collect photo or video documentation of all damages.
  2. Contact the insurance company: File your claim directly with the insurance company. Follow their instructions for paperwork and other next steps.
  3. Talk to the insurance adjuster: The insurance company will put you in touch with an insurance adjuster who will estimate the damage. Alternatively, they may send you to an approved mechanic to get an estimate for repairs. Review the estimate for repairs to ensure there is no need to contest the claim estimation.
  4. Take care of your vehicle: You may be able to choose where to have your damaged vehicle repaired. If your car is totaled, you may receive fair market value for its age and condition.
  5. Track car rental costs: You may get reimbursed for a car rental while your car is being repaired, so submit your receipts to the adjuster.
  6. Receive your reimbursement: Once the insurance company evaluates your claim, you will either be sent a check or the provider will pay the mechanic directly.

The takeaway

  • Property damage liability reimburses others when you cause damage to their car or property while driving. 
  • Your state dictates the minimum property damage liability coverage you need.

Property damage liability helps protect you financially when you cause an accident. While you’re required to have a certain amount by state regulations, purchasing higher limits offers extra protection. It may be worth the cost, especially as an accident can quickly exceed minimum policy amounts. Discuss coverage limits with your insurer to be best protected while on the road.

June Sham

Insurance writer and editor

June Sham is an insurance writer for Coverage. She aims to make insurance accessible to all readers and draws on her nearly three years of experience as a licensed producer for auto, property, umbrella and earthquake policies to help people understand their insurance needs. Prior to joining Coverage, she worked at a public accounting firm specializing in project management. She graduated from UC Riverside with a degree in Creative Writing and often still misses the sunshine of southern California.

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