Property Damage Liability Insurance: How it Works

A typical car insurance policy must include liability coverage, considering all states – except New Hampshire – require it.

As you drive home from work, a deer dashes across the highway. You try to avoid hitting the curb but end up smashing the car through your neighbor’s fence. Now, who would pay for the repairs? Property damage liability insurance covers the cost of damage you inflict on another person’s property.

What Is Property Damage Liability Insurance?

In addition to liability coverage, car insurance policies include property damage coverage. If you accidentally damage someone else’s property or vehicle, this insurance helps cover the cost of repairs.

Property damage liability insurance is a legal requirement in most states. The cost of repairs to another vehicle or property, such as a fence or the side of a building, will usually be covered by your coverage if you are at fault.

In most cases, property damage liability insurance will not cover damage to your vehicle. In that case, you must purchase collision insurance to cover your vehicle repair costs.

What Does Property Damage Liability Insurance Cover?

The damage you cause other people’s property can be divided into two types:

A vehicle that belongs to someone else. You are responsible for the damages caused to another vehicle by an accident in which you are at fault. Incidents can vary from smashing another driver’s vehicle to accidentally breaking into their bumper while backing out of a parking spot. Your property damage liability coverage will cover the expense of repairing or replacing the vehicle damaged up to the limits stated in your policy.

Property that belongs to someone else. For instance, to avoid an animal in the road, you hit someone’s fence when you swerve to avoid it. It might have been an accident that you ran over a neighbor’s mailbox. Such damages are covered by property damage liability insurance. This type of insurance may not provide coverage for your vehicle. Ensure your vehicle is protected against damage or theft by purchasing the required comprehensive and collision coverage.

Cost of the Property Damage Liability Insurance?

The liability limits for property damage coverage typically range from $5,000 to $100,000, depending on what options auto insurance companies offer to prospective policyholders. You can expect higher premiums when you have higher coverage limits.

There is no corresponding increase in premiums when your coverage limit is doubled or tripled. An increase from the lowest limit to the highest limit is only charged at 1.07 times the rate of the lowest limit.

A $10,000 property damage coverage limit is only increased by $5 per year when it is increased to $100,000. The same applies to policyholders who insure luxury or economy cars with our example company, regardless of their driving history.

State Requirements of the Property Damage Insurance

It depends on your state and how much property damage liability insurance you must carry. Each state and Washington, D.C., must meet the following minimum requirements: 

1. Alabama: $25,000
2. Alaska: $25,000
3. Arizona: $10,000
4. Arkansas: $25,000
5. California: $5,000
6. Colorado: $15,000
7. Connecticut: $20,000
8. Delaware: $10,000
9. District of Columbia: $10,000
10. Florida: $10,000
11. Georgia: $25,000
12. Hawaii: $10,000
13. Idaho: $15,000
14. Illinois: $20,000
15. Indiana: $25,000
16. Iowa: $15,000
17. Kansas: $25,000
18. Kentucky: $25,000
19. Louisiana: $25,000
20. Maine: $25,000
21. Maryland: $15,000
22. Massachusetts: $5,000
23. Michigan: $10,000
24. Minnesota: $10,000
25. Mississippi: $25,000
26. Missouri: $25,000
27. Montana: $20,000
28. Nebraska: $25,000
29. Nevada: $20,000
30. New Hampshire: $25,000
31. New Jersey: $5,000
32. New Mexico: $10,000
33. New York: $10,000
34. North Carolina: $25,000
35. North Dakota: $25,000
36. Ohio: $25,000
37. Oklahoma: $25,000
38. Oregon: $20,000
39. Pennsylvania: $5,000
40. Rhode Island: $25,000
41. South Carolina: $25,000
42. South Dakota: $25,000
43. Tennessee: $15,000
44. Texas: $25,000
45. Utah: $15,000
46. Vermont: $10,000
47. Virginia: $20,000
48. Washington: $10,000
49. West Virginia: $25,000
50. Wisconsin: $10,000
51. Wyoming: $20,0002

How Much Liability Coverage does a person need?

Consider the total value of your assets when determining how much liability insurance you require. If you select at least that much coverage, your financial well-being will be protected if you’re at fault in a car accident. Add other types of liability car insurance to your policy to increase your protection on the road, including:

• If someone hits your car without insurance, you can get uninsured motorist property damage insurance to help cover the costs of repairs.
• When someone without insurance or coverage hits you, uninsured motorist bodily injury coverage can help pay for medical care.
• Personal injury protection (PIP), also known as no-fault insurance, covers the cost of medical bills regardless of who is at fault. It is crucial to remember that not all states offer PIP coverage.

How to File a Property Damage Claim?

While property damage insurance will cover the damage you cause to someone else’s property, you may not have to file a claim against your policy. The insurance company of the person at fault usually handles property damage claims as third-party car insurance claims, so you or someone else can claim their policy.

Depending on the limits on the property damage coverage, the insurance company may be prepared to pay out a maximum payout for any given accident.

Damages caused by the accident that exceeds the policy’s coverage can be recovered directly from the policyholder if the excess exceeds the policy’s coverage. Alternatively, the difference may need to be repaid through civil litigation.

You can use your collision insurance to compensate for your share of property damage if you are mostly to blame in the accident and cannot recoup enough money from the other driver’s insurance. Even though collision insurance is recommended, it is typically expensive and optional.

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Conclusion

Along with providing protection, property damage liability insurance covers losses in at-fault accidents up to your limits. Having inadequate liability coverage could result in you paying these amounts out of pocket.

You can avoid paying out-of-pocket by choosing the right auto insurance policy for your needs with Beem. It provides coverage for damage to your vehicle, damage to other vehicles or property, and injuries to yourself or others. In most states, you can purchase limits above the minimum requirement.

You may be required to pay the difference if the damage you cause exceeds the $10,000 coverage limit. You can avoid paying out of pocket if you are at fault in an accident by having a higher liability coverage limit. Insurance premiums will likely be more significant if you set too high coverage limits.