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Understanding property damage liability insurance

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What is property damage liability insurance?

Property damage liability insurance helps pay for the cost of repairs for the damage you cause to another person’s vehicle or property in a covered accident where you’re at fault. Your state probably requires you to carry this coverage if you own a vehicle. In most states, property damage liability is included with your liability insurance policy.

Carrying property damage liability insurance can help cushion the financial blow if you hit another person’s vehicle or property. This coverage can pay a certain amount (up to your coverage limit) if someone files a claim against you for property damage following an accident.

What does property damage liability insurance cover?

Property damage liability insurance can help protect you from some of the financial burden of paying for damage to another person’s vehicle or property resulting from a covered accident you cause. Depending on your policy, it could also cover legal defense fees that arise from your property damage claim.

Covered damages typically fall into two categories:

Damage to another vehicle

If you get into an accident and damage another person’s car, property damage liability can help cover your financial liability for the costs of repairs, parts, and labor if their insurance company files a claim against you.

Damage to another person’s property

Vehicles aren’t the only things that can be damaged in an accident. Property damage liability insurance can help cover damage you cause to another person’s property, such as:

  • Buildings, like homes or businesses
  • Fences
  • Mailboxes
  • Lampposts

Property damage liability insurance can also help cover damage to public property, like road signs and bridges, and even the costs of removing debris from the accident site.

What doesn’t property damage liability insurance cover?

While property damage liability insurance can cover several common liabilities that arise from an accident you cause, there are some important limitations you should know about.

Damage to your own property

Property damage liability insurance applies to damage to another person’s property resulting from an accident you’re at fault for, but it doesn’t cover damage to your own property. You can help cover damage to your own property by adding collision insurance to your insurance policy. Although no state laws require collision insurance, it can be worthwhile if you want your property to be covered in accidents where you’re found to be at fault.

If your vehicle or property is damaged in an accident caused by another driver, their property damage liability insurance may cover the damages to your property. Adding uninsured motorist property damage coverage to your policy can help cover your damaged property if the at-fault motorist doesn’t have coverage.

Bodily injury coverage

As the name suggests, property damage liability insurance only covers damage to things—not peoples’ injuries and the related costs. Expenses arising from injuries can be covered by a different type of coverage. Along with property damage liability, bodily injury liability insurance is also a requirement in most states and falls under a separate coverage limit.

Property damage liability requirements

Property damage liability insurance is required in all states that require motorists to carry auto insurance policies.

Minimum property damage liability limits

Each state has its own legal minimum requirements for property damage liability insurance. Most states require at least $25,000 in coverage, but there’s a range—in California and Pennsylvania, for example, the minimum requirements are just $5,000.

These minimums are on a per-accident basis. This means your insurance provider must cover your liability up to your state’s required minimum limit in damages arising from each accident you’re at fault for.

How much property damage liability insurance do I need?

You legally only need to meet your state’s minimum required coverage property damage liability limits. But keep in mind accidents can quickly become expensive, and realistically, minimum coverage can be insufficient in a lot of cases. Here’s an example that illustrates this:

Let’s say your state minimum requirement for property damage liability insurance is $25,000. That’s still only half the average price of a new car. So, if you’re found to be at fault in an accident in which someone else’s new car is damaged, you could quickly exceed your state’s minimum, leaving you on the hook for significant out-of-pocket costs.

Obviously, the amount of coverage you carry largely depends on what you can afford. We recommend $50,000 as a minimum amount of property damage liability insurance, but ultimately it’s up to you.

What’s the difference between liability and property damage liability?

In insurance, liability is the amount of money you’re legally obligated to pay others. For example, if you cause an accident that results in $150,000 of damage, you’re legally responsible for the full $150,000.

Liability insurance is a safety net that can cover some—or all—of your liabilities that result from an accident you cause. If you’re liable for $150,000 but you have liability insurance with a $100,000 policy limit, you may have to pay the remaining $50,000 out of your own pocket. If you have higher coverage, you might not pay anything out of pocket at all.

For auto insurance, liability covers two distinct areas of risk: property damage and bodily injury. While property damage covers damage you cause to other vehicles, buildings, and public or private property, bodily injury covers the injuries of the people involved.

How much does property damage liability insurance cost?

It depends. There are a lot of factors that contribute to your insurance rates. These factors include things that are specific to you and your household, such as:

  • The number of drivers in your home
  • Your accident and traffic violation history
  • How many miles you drive each year

Other factors may be out of your control, such as your age or the number of drivers in your area.

Do I need property damage liability and bodily injury liability?

In most states, you’re required to carry both property damage liability and bodily injury liability insurance. Florida is the only state that requires property damage liability but not bodily injury liability coverage.

While property damage liability insurance can help cover you for property damages another party claims against you following an accident you cause, bodily injury liability can help pay for the other person’s hospital bills and other related medical expenses if they’re injured in an accident you cause.

Remember, these two types of liability insurance don’t cover your own property—for that, you need collision coverage.

If you’ve spent any time online looking at insurance policies, you may have seen policies described as “50/100/50,” “100/300/100,” or “25/50/25.” These numbers indicate the coverage limits (in thousands of dollars) of bodily injury liability and property damage liability. The X/Y/Z format is shorthand:

  • X: The maximum payment for bodily injury to one person involved in a single accident
  • Y: The maximum payment for bodily injury to two or more persons involved in a single accident
  • Z: The maximum payment for property damage to all persons involved in a single accident

For example, a 50/100/50 policy could pay a maximum of $50,000 for each accident for a single person’s injuries, $100,000 for injuries to two or more people in a single accident, and $50,000 for property damage in a single accident.

How does property damage liability insurance work?

If you’re involved in a covered accident and the other involved party files a claim against you for property damage, an insurance adjuster will determine who’s legally at fault in the accident. They’ll also provide an estimate for how much the repairs will cost, and—if you’re found to be at fault—how much your policy will pay out.

Your property damage liability insurance can pay out up to your limits with no deductible or co-pay. This means if the cost to repair the damage is less than your coverage limit, you may not have to pay anything out-of-pocket. However, your insurance rates might increase after you’re at fault for an accident.

Property damage liability vs comprehensive insurance

Filing a property damage liability claim

If you’re in an accident, the first thing you should do is make sure everyone involved is safe. Once you’ve moved to a safe area and called the police, collect the following information from any other drivers or property owners involved in the accident:

  • Name
  • Phone number
  • Insurance provider
  • Insurance policy number

Document the scene and circumstances of the accident to the best of your ability, including pictures of your vehicle and other vehicles or property involved.

Don’t admit fault to the police, other drivers, or your insurance provider, even if you believe you were responsible for the accident. Let the insurance adjuster determine fault—your job is simply to record facts as they truly are and report the accident to your insurance agent or provider. Call them as soon as you’ve gathered the necessary info and let them take it from there.

Property damage liability coverage FAQs

Is property damage liability insurance required?

Yes. In all states that require auto insurance, drivers are required to carry property damage liability insurance. The minimum coverage limits vary from $5,000 to $25,000, depending on your state.

Is there a deductible for property damage liability claims?

No. When you’re at fault for a covered accident, your insurance provider pays the liability claim up to your coverage limit. As long as the cost of the accident is lower than your coverage limit, you won’t have to pay anything out of pocket for property damage liability. It’s important to note, however, that your premiums may go up afterwards.

What’s classified as property damage?

Property damage includes damage to other vehicles, buildings, signs, mailboxes, bridges, and other personal or public property. In short, anything physically damaged as a result of a car accident can be classified as property damage.

Remember, property damage liability insurance only covers your obligation to pay for repairs to other people’s personal or public property—it doesn’t cover repairs to your own vehicle. For that, you need collision insurance.

What happens if you’re involved in an accident and the at-fault driver has property damage liability insurance, but not enough to cover the damages to your car? That’s where uninsured motorist property damage coverage helps protect you.

What happens if you drive without state-required car insurance? You could be forced to pay for someone else’s expensive repairs and medical bills following an accident. But you could also lose your license, your car, and even your freedom.

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