A deer dashes across the road as you're heading home from work. You jump the curb and smash through the neighbour's fence as you swerve to escape it. Who will foot the bill for the repairs?
If you're covered by insurance, your deductible is deducted from the total cost. Property damage liability insurance serves this purpose by providing coverage for damage you do to someone else's property. All states, except New Hampshire, require liability coverage.
How Does Liability Insurance for Property Damage Work?
Property damage liability insurance is typically only a small element of a comprehensive car insurance policy. The following categories of coverage are commonly included in car insurance policies:
1. Bodily Injury Liability: If you or a member of your family injures someone else, bodily injury liability coverage pays for their medical bills and lost wages.
2. Medical Payments or Personal Injury Protection (PIP): If you or a passenger is harmed in a collision, medical payments coverage or PIP will cover medical bills, lost earnings, and even burial expenses.
3. Collision coverage pays for the policyholder's vehicle's repairs or replacement following an accident.
4. Comprehensive coverage compensates policyholders for damages incurred as a result of theft or natural disasters.
5. Uninsured/Underinsured Motorist Coverage: If you're in a collision with someone who doesn't have insurance or has insufficient insurance to cover your losses, uninsured/underinsured motorist coverage will pay for your auto repairs and other expenses.
6. Property Damage Liability: When you are at fault in an accident, property damage liability insurance pays for repairs to another person's car or property, such as a fence or a building. It will also cover the costs of removing debris left behind by an accident, such as a broken tree or signs.
Liability insurance is usually expressed as $50,000/$100,000/$50,000. The first number represents your bodily injury coverage, the second number is your bodily injury coverage per event limit, and the third number represents the property damage liability component of your policy.
Property damage liability does not cover repairs to your vehicle or medical expenses, so you'll need additional coverage like collision and comprehensive insurance to protect yourself.
How Much Property Damage Liability Coverage Are You Expected to Have By Law?
Every state mandates that a driver maintain a certain level of liability insurance coverage. Property damage liability and bodily injury liability coverage are often required by states.
State-by-state requirements for minimum coverage vary. In California, for example, drivers must obtain property damage liability coverage of at least $5,000. Property damage liability coverage in Texas must be at least $25,000 to be legal. It's $10,000 in Nevada.
The maximum amount your insurance will pay for a covered claim is known as a limit. When you acquire automobile insurance, you can set your liability coverage limits, or you can alter them later with your agent's help.
Property Damage Liability Insurance: How Much Does It Cost?
You'll need to buy coverage from an insurance company because property damage liability coverage is mandated by law in most jurisdictions. The cost of your automobile insurance policy is determined by factors such as your location, vehicle, driving history, age, gender, insurance alternatives, and coverage quantities.
Liability-only insurance is insufficient for the majority of drivers. According to the Insurance Information Institute, 78 per cent of insured drivers increase their collision policy to increase their protection.
Finally, remember this:
In most cases, you can buy limits that are higher than the state's minimum. If you choose a $10,000 coverage limit but cause more damage than that, you may have to pay the difference out of pocket. If you have a greater liability coverage level, you may be able to avoid paying out of pocket in the event of an at-fault collision.
Your insurance premiums will most likely be higher if you set your coverage limits too high. You may want to speak with a local insurance agent about your alternatives as you evaluate how high to set your limits.