Property Damage Liability Coverage

What does property damage liability coverage cover?

Property damage liability covers the costs of property damage caused by a car accident for which you are at fault. That property could be another car, a fence, or a building. It also pays for your legal defense costs in the case of a lawsuit. It does not cover damages to your vehicle or any bodily injuries.

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Since you can be sued to cover the full cost of any property damages incurred in an accident for which you are at fault, it’s a good idea to make sure you have enough of this type of coverage. If the costs of the damage exceed your coverage, you will be responsible for paying them out of your own pocket.

How much property and damage liability insurance do I need?

To calculate how much property damage liability you should buy, consider your assets. If you own a house, have significant savings or financial investments, or own other valuable property, it’s wise to buy enough coverage to make sure your financial assets are protected in the event of a lawsuit. You should also consider who else in your household will be driving your vehicles. If you have children who drive, it’s smart to buy this type of coverage, since statistically young people are more likely to get into accidents, and you will be liable in a lawsuit. If someone in your household has a less-than-perfect driving record, you should also take that into account when you’re buying coverage. As your assets grow, you should periodically review your coverage amounts to make sure they reflect your current finances.

State-mandated minimum amounts of property damage liability are often low, around $5,000. Since the costs of property damage can go much higher—for example, if you are involved in an accident with a luxury car—most professionals suggest buying more coverage than the minimum.  You will probably want to carry a minimum of $50,000 of this type of coverage for each vehicle you own. Some insurers recommend a minimum of $100,000 to make sure all of your assets are protected.

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