Liability coverage is the part of an auto policy that pays other people when you are at fault: their medical bills, their lost wages, the repair or replacement of their car. Nearly every state requires it. The question is not whether to carry it, but how much.
What the state minimum actually means
Each state sets a minimum amount of liability coverage you must carry to drive legally. These minimums are often low compared to what a serious accident can cost. Hospital stays, surgery and ongoing care can run well past a low bodily injury limit, and damaging a newer vehicle can exceed a low property damage limit. The minimum keeps you legal. It does not necessarily keep you protected.
How the limits are written
Liability is usually shown as three numbers, such as 100/300/100. The first is the per-person bodily injury limit, the second is the per-accident bodily injury limit, and the third is the property damage limit, all in thousands of dollars. Once a claim reaches a limit, the policy stops paying. Costs above the limit can be pursued against you personally.
Questions that help size your limits
- What do you have to protect? Savings, home equity and future income can all be at stake in a lawsuit. The more you have, the higher the limits people tend to choose.
- What could you pay out of pocket? Be honest about how a judgment above your limits would affect you.
- What does the price difference look like? Moving from the minimum to higher limits often costs less than people expect, because the first dollars of coverage are the ones most likely to be used. Ask for the price at two or three limit levels before deciding.
- Do you carry an umbrella policy? Umbrella policies add liability protection above your auto limits, and they usually require your auto liability to be at a certain level first.
A common approach: many people start by asking for quotes at their state minimum, at a middle level such as 50/100/50, and at a higher level such as 100/300/100, then decide based on the actual price gap rather than guessing.
Do not forget the mirror image
Liability protects other people from you. Uninsured and underinsured motorist coverage protects you from drivers who carry too little or nothing at all. Many people set those limits to match their liability limits. Some states require it, and others let you reject it in writing.
The bottom line
There is no single right number. A good liability limit is one that fits what you own and what you could afford to lose, at a price you have actually seen. Choosing the minimum because it is the default is the one approach worth avoiding.
This guide is general information, not legal, tax, or financial advice, and it does not describe any specific policy. Coverage rules vary by state and by insurer, so read your own policy documents. America Auto is not an insurance carrier, agency, or broker.
