Property damage liability is an essential part of your auto insurance policy. It provides you with an additional level of protection in case you’re found to be at-fault for an accident. Find out what property damage liability insurance is, what it covers and how much you need in this article.
What is property damage liability?
A broad property damage liability definition is the required component of an auto insurance policy that covers the cost of any damages to someone else’s vehicle or other personal property that you hit with your car. Each state has its own minimum amount of required liability coverage.
The purpose is to protect your personal finances from expensive lawsuits. By paying a little each month or year as part of your auto policy, you give yourself a major financial cushion in case you cause an accident and damage someone else’s policy.
What does property damage liability cover?
Property damage liability offers a fairly broad range of coverage. It generally breaks down into two separate categories:
- Vehicle damage: your property damage liability plan covers reimbursement for damage caused to another driver’s vehicle. If you accidentally rear-end someone, your liability coverage would pay for their repair costs, up to the limit of your policy.
- Property damage: this component covers any personal property you damage with your vehicle, such as backing into a neighbor’s mailbox. The individual would receive payment from your insurance company to replace the damaged property.
How does property damage liability work?
When you’re at-fault in a car accident, the other parties who sustain damage can file a claim to your car insurance company, which will only pay up to your plan’s coverage limit for damages. If the damages are estimated to be above that amount, the injured party can sue you for your personal assets to make up the difference. If you have an umbrella insurance policy, you can tap into that coverage once your auto plan policy hits its limits.
Who needs property damage liability?
If you own a vehicle, your state likely requires you to have property damage liability. Minimum amounts vary depending on where you live. However, it may be in your best interest to purchase coverage even beyond that minimum amount so that you don’t put your personal assets at risk.
What are the requirements for coverage?
Coverage is usually considered per incident, so your state will dictate the minimum property liability damage coverage you need. The following chart indicates each state’s requirements:
| State | Minimum Property Liability Damage |
|---|---|
| Alabama | $25,000 |
| Alaska | $25,000 |
| Arizona | $10,000 |
| Arkansas | $25,000 |
| California | $5,000 |
| Colorado | $15,000 |
| Connecticut | $25,000 |
| Delaware | $10,000 |
| Florida | $10,000 |
| Georgia | $25,000 |
| Hawaii | $10,000 |
| Idaho | $15,000 |
| Illinois | $20,000 |
| Indiana | $25,000 |
| Iowa | $15,000 |
| Kansas | $25,000 |
| Kentucky | $10,000 |
| Louisiana | $25,000 |
| Maine | $25,000 |
| Maryland | $15,000 |
| Massachusetts | $5,000 |
| Michigan | $10,000 |
| Minnesota | $35,000 |
| Mississippi | $25,000 |
| Missouri | $10,000 |
| Montana | $20,000 |
| Nebraska | $25,000 |
| Nevada | $20,000 |
| New Hampshire | $25,000 |
| New Jersey | $5,000 |
| New Mexico | $10,000 |
| New York | $10,000 |
| North Carolina | $25,000 |
| North Dakota | $25,000 |
| Ohio | $25,000 |
| Oklahoma | $25,000 |
| Oregon | $20,000 |
| Pennsylvania | $5,000 |
| Rhode Island | $25,000 |
| South Carolina | $25,000 |
| South Dakota | $25,000 |
| Tennessee | $15,000 |
| Texas | $25,000 |
| Utah | $15,000 |
| Vermont | $10,000 |
| Virginia | $20,000 |
| Washington | $10,000 |
| West Virginia | $10,000 |
| Wisconsin | $10,000 |
| Wyoming | $20,000 |
How much property damage liability insurance do I need?
At a minimum, you must meet your state’s basic coverage requirements, which tend to range between $5,000 and $25,000. But even with the minimum required amount, you could put yourself at financial risk without a higher policy, especially since property damages could quickly exceed those numbers. For instance, the average cost of a new car in the U.S. was over $36,000 in 2019. If you total someone’s car and it’s valued at more than your property damage liability, you could be sued for the remaining balance. While minimum coverage is required to be able to drive legally, having a higher amount generally provides better protection against financial loss.
Property damage liability insurance cost
The cost of property damage liability insurance varies based on a number of factors. Here are a few key factors that can influence your policy:
- The type of car
- Location
- Your driving record
- Gender
- Age
- Credit score
- Amount of coverage
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.
- Exchange insurance information: when the accident occurs, follow proper protocol for your state for notifying the authorities or emergency services as necessary. Also be sure to get the insurance information from the at-fault driver. Collect photo or video documentation of all damages.
- Contact the insurance company: file your claim directly with the insurance company. Follow their instructions for paperwork and other next steps.
- 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.
- Take care of your vehicle: you can choose where to have your damaged vehicle repaired. If your car is totaled, you may receive fair market value for its age and condition.
- 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.
- 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.
What is the difference between bodily injury and property damage liability?
Most states require two separate policies covering bodily injury and property damage liability. While property damage covers the repair or replacement of other vehicles or personal property damaged by your vehicle, bodily injury covers things like medical expenses and lost wages of an injured person.
| Bodily Injury Liability | Property Damage Liability | |
|---|---|---|
| Covers others involved in accident | Yes | Yes |
| Covers you and your passengers | No | No |
| Minimum coverage required by state | Yes | Yes |
| What’s covered | Medical expenses Lost wages Legal fees Physical pain or emotional suffering Funeral costs | Vehicle damages Property damages |
How to get extra protection for property damage liability
You may be able to purchase additional property damage liability coverage through your insurance company, but you may also wish to get broader liability protection through an umbrella policy. This gives you additional coverage for claim amounts beyond your auto policy. It may be worth the extra insurance costs, especially if you have high-value assets you want to protect.
The takeaway
- Property damage liability reimburses others when they file a claim against you
- Your state dictates the minimum coverage you need
Property damage liability helps protect you financially from potential lawsuits when you cause an accident. Purchasing additional coverage offers extra protection and may be worth the cost, especially since a costly accident can quickly exceed minimum policy amounts. Discuss coverage limits with your insurer to be best protected while on the road.
