What Does Liability Insurance Actually Cover?

Liability insurance is the foundation of every auto insurance policy and the minimum coverage required in 49 out of 50 states. But despite being universal, it's one of the most misunderstood types of coverage.

The Two Types of Liability Coverage

Bodily Injury Liability (BI)

This covers medical expenses, lost wages, pain and suffering, and legal costs when you injure someone else in an accident. It pays for the other person — not you or your passengers.

Property Damage Liability (PD)

This covers damage you cause to other people's property — their car, a fence, a building, a utility pole.

Understanding Liability Limits

Limits are typically written as three numbers, like 25/50/25 or 100/300/100. First number: maximum per person for bodily injury. Second: maximum per accident for bodily injury. Third: maximum for property damage.

State minimums are shockingly low. Texas requires 30/60/25, which sounds reasonable until you consider that the average new car costs over $48,000 and a single ER visit can exceed $10,000.

What Liability Insurance Does NOT Cover

Your own injuries. You need PIP or MedPay for that. Your own vehicle. That's collision coverage. Theft, vandalism, or weather damage. That's comprehensive coverage. Intentional damage. Insurance never covers deliberate acts.

Are State Minimums Enough?

In almost every case: no. The average bodily injury claim exceeds $24,000, and serious injuries can reach $100,000-$500,000. Financial advisors generally recommend at least 100/300/100.

The Cost Difference Is Smaller Than You Think

Jumping from 30/60/25 to 100/300/100 typically adds only $10-$30 per month. That's a tiny price increase for dramatically better protection.

The Bottom Line

Liability insurance is the most important part of your auto policy, but state minimum limits leave most drivers dangerously underinsured. Truvo can help you compare policies with proper liability limits across multiple carriers.