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What Is Liability Insurance?

Liability insurance pays for injuries and property damage you cause to others in an at-fault accident.

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What Is Liability Insurance Insurance?

Liability insurance has two parts: bodily injury liability and property damage liability. Bodily injury liability pays for medical bills, lost wages, pain and suffering, and legal fees if you injure someone in an accident you caused. Property damage liability covers the cost to repair or replace another person's vehicle, fence, mailbox, building, or other property you damage. Both coverages apply only to harm you cause to others — they don't pay for your own injuries or vehicle damage.

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Who Needs Liability Insurance Insurance?

Every driver who legally operates a vehicle needs liability insurance — it's required by law in 48 states. Even if you're driving an older car that's fully paid off and you skip collision coverage to save money, you still need liability because it protects you from being personally sued for tens or hundreds of thousands of dollars if you cause an accident. First-time drivers should strongly consider buying higher limits than the state minimum (such as 100/300/100 instead of 25/50/25) because one serious accident can lead to a lawsuit that follows you for years.

If you're financing or leasing a vehicle, your lender will require you to carry liability plus collision and comprehensive, so this decision is made for you.

How Much Does Liability Insurance Insurance Cost?

Your state's minimum requirements — states like California and New Jersey have higher minimums and correspondingly higher base rates than states with lower minimums.
Where you live — urban areas with higher accident rates and more expensive vehicle repairs cost more to insure than rural areas, even within the same state.
Your credit history in most states — insurers use credit-based insurance scores to predict claim likelihood, which disproportionately affects first-time buyers with limited credit history.

Related Coverage Types

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Collision Coverage→

Driver's-eye view from inside a car at night, with two hands gripping the steering wheel, an illuminated instrument cluster behind it, and a road with blurred lights through the windshield.

Good Student Discount Coverage→

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Comprehensive Coverage→

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Full Coverage→

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