Ever stop to read your car insurance policy? It’s probably not something you’d want to dig into on a rainy day, but it’s actually very important that you understand the coverage types in your policy, as well as what is covered and what is not.
Your policy includes several types of coverage, each with a different “limit,” or amount that it will reimburse you for if you have to file a claim. One of these coverage types is property damage liability coverage. It protects you if you cause an accident that damages someone’s property.
Without this important coverage, you’d be responsible for paying for what could amount to thousands of dollars in damages to someone’s car or home. Property damage liability insurance makes sure your assets are protected while the injured party is compensated when you’re at fault for an accident.
Learn more about property damage liability insurance here. And contact an independent insurance agent for expert information and evaluation of your car insurance needs.
Key Takeaways - Property Damage Liability Coverage
Property damage liability is a type of car insurance coverage that pays for damage you cause to another person’s vehicle or property while driving. It does not cover damage to your own car.
Your policy limits the amount it will pay out for a property damage liability claim. This is the maximum amount it will pay per accident (e.g., $25,000), and you're responsible for any costs exceeding that limit.
Property damage liability is mandatory in most states. It is often packaged with another required coverage — bodily injury liability coverage.
It is often a good idea to purchase more bodily injury liability coverage than the minimum limit required by your state.
What Is Property Damage Liability Insurance?
Property damage liability is a type of car insurance coverage that pays for damage you cause to another person’s vehicle or property while driving.
When you’re at fault for an accident, it’s your responsibility to compensate any other parties whose property you’ve damaged. Property damage liability coverage pays for repairs or replacement of someone’s damaged property, and often covers things like other cars, structures (e.g., fences, mailboxes, homes, storefronts), and other types of property (e.g., street signs, personal property inside the other party’s vehicles, etc.)
It can even help with your legal fees if you’re sued by the other party.
Property damage liability coverage is required in most states, but the required coverage limits vary by state. Most people purchase more than their state’s minimum coverage requirements to make sure they’re adequately protected if they cause a crash.
Why Is Property Damage Liability Required?
Property damage liability coverage is required for several reasons; in general, it ensures that anyone who takes on the responsibility of driving is also financially responsible for any damage they cause. If you’re going to drive, you need to be able to pay for other people’s expenses when you cause them harm.
While the main reason for requiring this coverage is to provide financial protection to others on the road with you, the property damage liability requirement also protects you, the driver. If you don’t have the means to pay for damages if you cause an accident, you could be subject to financial ruin.
Without the coverage, you’d be responsible for paying 100% of the damages out-of-pocket. Unless you’re very wealthy, this is a tremendous risk to take and puts all of your assets up for grabs if you’re at fault for a serious accident.
What Does Property Damage Liability Cover?
Property damage liability insurance covers damage to someone else’s property after you cause a car accident. In addition, if you’ve allowed someone else to drive your car, it would cover damage that person is responsible for while driving it.
Property damage liability coverage can help you pay for:
- Damage to the other person’s car, including paying for any reduced value to the car as a result of the crash
- Damage to buildings and other structures, like lampposts and fences, including homes, businesses, and government property
- Damage to trees and other landscaping
Property damage liability may also cover legal expenses if you’re sued.
Be aware that property damage liability coverage is explicitly for other people’s expenses; it does not cover damage to your own vehicle or property.
What Property Damage Liability Does NOT Cover
The most important thing to remember about property damage liability coverage is that it does not cover damage to your own vehicle or property. Likewise, it doesn’t cover any injuries you receive in a car accident.
In addition, property damage liability insurance does not cover another party’s property damage costs if you’re not at fault in an accident.
You need comprehensive or collision coverage (optional coverage in your auto insurance policy) to cover damage to your own vehicle when you’re at fault for an accident. Medical payments coverage is also available to help cover the costs of injuries for yourself or your passengers, regardless of who’s at fault for an accident.
Property Damage Liability Limits Explained
Property damage liability limits can be confusing when you read your policy. Property damage liability coverage is expressed as part of your overall package of liability coverage, which includes bodily injury and property damage liability coverage.
Auto liability coverage is typically expressed as something like this:
- Bodily injury and property damage coverage: 100/300/50
The first two numbers (100/300) refer to your bodily injury coverage. The third number (50) is your property damage liability limit. The “50” means $50,000 per accident, and this is the maximum amount your policy will pay out for property damage in any accident for which you’re at fault.
This means your policy pays out after an accident you cause, but only up to the amount stated in your policy. If you cause another accident, the policy will pay out up to that policy limit again.
The property damage per accident limit is not subject to a deductible.
Let’s say your car insurance policy has a property damage liability limit of $25,000. If you rear-end a car and cause $5,000 in damage to the other driver’s vehicle, your policy would cover all of the repair costs because the total is lower than your policy’s property damage liability limit.
If you caused more than $25,000 in property damage, your policy would only pay up to its property damage liability limit. Any damages over $25,000 would be your responsibility to pay out-of-pocket.
How Much Property Damage Liability Coverage Do You Need?
Every state requires a driver to carry a specified minimum amount of property damage and bodily injury liability coverage. These mandatory coverage limits vary by state.
For example:
- California: $30,000 per person for bodily injury/$60,000 per accident for bodily injury/$15,000 per accident for property damage
- New York: $25,000 for bodily injury and $50,000 for death per person/$50,000 for bodily injury and $100,000 for death per accident/$10,000 per accident for property damage
- Texas: $30,000 per person for bodily injury/$60,000 per accident for bodily injury/$25,000 per accident for property damage
In many cases, the state-mandated car insurance minimums may not be enough to fully cover all property damage you might cause. Imagine the type of repairs you’d have to pay for if you damage a luxury vehicle. And aside from the cost of repairs, you could face a costly lawsuit in just about any situation where you cause an accident.
It’s typically recommended that you have enough property damage liability coverage to cover the entire cost of property damage if you’re at fault for an accident. In the unfortunate situation where you cause a major incident with multiple vehicles involved, the costs could greatly exceed your state’s minimum coverage.
The best way to determine how much bodily injury liability coverage you need is to sit down with an independent insurance agent. A local agent can help you understand how the coverage works and how much coverage you need to protect your assets.
The Difference: Property Damage Liability vs. Comprehensive and Collision Coverage
The difference between property damage liability coverage and comprehensive and collision coverage is pretty simple.
Property damage liability covers damage you cause to vehicles or property that belongs to another person or persons. It is mandated coverage in most states.
Comprehensive and collision coverage pay for damage to your own vehicle, regardless of who is at fault. Comprehensive and collision coverage are optional.
- Comprehensive coverage pays for losses from almost all other types of damage to your vehicle other than that resulting from a collision, such as theft, fire, vandalism, weather, birds or animals, glass breakage, and so on.
- Collision coverage protects your vehicle against physical damage when it hits or is hit by another vehicle or object, such as a tree.
All three types of coverage are for physical damage, but the difference is clear: property damage liability coverage pays for damages you cause to others, while comprehensive and collision coverage help you pay for damage to your own car, depending on the circumstances.
How to File a Property Damage Liability Claim
Not every accident is the same, but you can use the following as a guideline for filing a property damage liability claim:
- After an accident, be sure to get the other driver’s contact information and insurance company information.
- Document the damage to the other driver’s car as well as your own car. (Make sure it is safe to do so.)
- Contact your insurance company directly or contact your independent insurance agent. Your insurance ID card will contain information about where to call to file a claim.
- You’ll be assigned a claims adjuster who will work with the other party to determine repair costs for any damage you caused. Your insurance company will pay for the damages according to your policy’s conditions and limits.
An independent insurance agent can be an invaluable resource during these times. Agents are experts at navigating the claims process and can help you understand it and expedite it.
Common Scenarios Where Property Damage Liability Applies
When might your property damage liability coverage apply? It can cover you any time you’re at fault for a car accident, from fairly mundane circumstances to severe, multi-car accidents.
Consider these scenarios where you’d be responsible for paying for damage you caused with your car:
- You hit a mailbox while turning into someone else’s driveway
- You crash into a storefront after accidentally putting your car into “drive” instead of “reverse”
- You rear-end another car while in traffic
- You go through a red light and cause a serious, multi-car crash
In these cases, and many others, your property damage liability coverage would help you pay for any damage that you’re responsible for, up to the limits of your policy.
How an Independent Insurance Agent Can Help You Get a Quote for Property Damage Liability Insurance
An independent insurance agent is your best resource for car insurance and understanding property damage liability coverage.
A local agent can get fast, reliable, and free quotes from multiple insurance companies. You’ll be able to compare costs and coverage and choose the policy and property damage liability limits that best suit your needs and budget.
FAQs About Property Damage Liability Coverage
What is the minimum property damage liability required in my state?
Every state has different property damage liability coverage requirements, and some may even mandate other types of coverage depending on state law. You can find your state’s minimum coverage requirements by checking with your state’s insurance department, motor vehicle department, or other related agency.
The best way to find out your state’s car insurance requirements is to talk with a local independent insurance agent. These agents are experts in helping people comply with all of your state’s insurance laws.
Does property damage liability insurance cover rental cars or non-vehicle property?
Yes, your own property damage liability insurance will typically cover you when you’re driving a rental car within the U.S. and Canada. If you have minimal liability coverage on your auto policy, you could buy the supplemental protection offered by the rental company for additional protection. Be sure to check your specific car insurance policy for how it covers rental cars.
And yes, property damage liability coverage covers non-vehicle property. This can include property inside someone else’s car, as well as homes, buildings, lamp posts, mailboxes, fences, and even landscaping.
What happens if the property damage exceeds my policy limit?
If the property damage you cause exceeds your policy limit, you’re still responsible for paying the other party’s expenses. You’ll have to pay the costs above and beyond your coverage limit out of your pocket.
How do I choose the right property damage liability coverage?
You can choose the right property damage liability coverage by first finding out your state’s minimum required coverage, and then determining if that minimum limit would be sufficient to cover the damages and your assets if you cause an accident. An independent insurance agent can help you determine the right property damage liability limits for your needs and budget.
Will property damage liability cover hit-and-run accidents?
No, your property damage liability coverage does not cover hit-and-run accidents. If your car is damaged by a hit-and-run driver, your repairs may be paid for if your policy includes collision coverage or if it includes uninsured motorist coverage. These types of coverage pay for damage to your own vehicle under certain circumstances, while property damage liability coverage only applies to damage you cause to another person’s vehicle or property if you’re at fault for an accident.
Sources
https://www.dmv.ca.gov/portal/vehicle-registration/insurance-requirements/#:~:text=California%20requires%20insurance%20for%20all%20vehicles%20operated,company%20licensed%20to%20do%20business%20in%20California
https://www.tdi.texas.gov/pubs/consumer/cb020.html#:~:text=Texas%20law%20requires%20you%20to%20have%20at,property%20damage.%20This%20is%20called%2030/60/25%20coverage.
https://dmv.ny.gov/insurance/insurance-requirements