What is liability insurance?

Consider the two scenarios below, assuming your liability limits are $25,000 per person, $50,000 per accident, and $20,000 for property damage.

You’ll usually see your liability coverage broken into three separate numbers that indicate your liability limits for bodily injury and property damage (the minimum limits required vary by state). For example, the minimum limits for auto liability in Illinois are $25,000/$50,000/$20,000. Here’s what those numbers mean:

What does auto liability insurance cover?

If you’re at fault in an accident, your liability limits pay for damages and injuries you cause to others, including:

  • Damage to other cars
  • Damage to property (mailbox, house, street sign, guardrail, etc.)
  • Injuries to other drivers/passengers/pedestrians
  • Lawsuits and attorney/court fees

Do I need auto liability insurance?

Yes, auto liability coverage is required in nearly every state. However, the amount of coverage you’re required to have varies widely between states.

How much auto liability insurance do I need?

If you’re liable in an accident, a court judgment could cost you your life savings, so you’ll want to make sure you’re well-covered. Add up your assets, including bank, brokerage, and retirement accounts, as well as equity in your home and other property. Then, subtract your debts to get your total net worth. Consider choosing at least that amount for bodily injury liability, as your total net worth can grow. Keep in mind, bodily injury typically results in more expensive claims than property damage.

Note that the cost of bodily injury liability will vary by coverage amount and per driver, and the difference between the state minimum price and $100,000 is often minimal. Get more tips on figuring out how much car insurance you need. Our car insurance estimator can also give you an idea of what coverage level is right for you.