Editorial Note: We earn a commission from affiliate links on Forbes Advisor. Commissions do not influence the opinions or ratings of our editors.
When you hit the road, the last thing you expect to happen is to get into an accident. Let alone one you caused. But most states require car owners to carry a minimum level of auto insurance so drivers have a way to pay for the accidents they cause.
Here’s how to understand property damage liability insurance.
What is property damage liability?
Property damage liability is a type of insurance that, along with bodily injury liability, ensures that drivers can pay for losses when they are at fault in an accident. If you cause damage to another person’s vehicle or property, then property damage liability insurance comes into play.
Property damage liability insurance is required by law in almost all states, with two exceptions:
- There is no state insurance law in New Hampshire (although some drivers in New Hampshire are required to purchase auto insurance, such as drivers who have previously caused an accident).
- In Virginia, car owners may pay a $500 uninsured motor vehicle fee if they do not wish to purchase liability coverage.
Even if your state doesn’t require auto insurance, it’s a smart move to have it.
What does property damage insurance cover?
Property damage liability insurance covers two main types of damage you cause to other people:
Another person’s vehicle. Whether you accidentally hit someone’s bumper while backing out of a parking space or cause an accident that totals another driver’s vehicle, you are financially responsible for the damages. Property Damage Liability will pay for that damage to the vehicle, including the cost of repairing or replacing someone else’s vehicle, up to the limit specified in your policy.
Foreign property. Let’s say you swerve to avoid an animal on the road and crash into someone’s fence. Or you accidentally ran over a neighbor’s mailbox. Property damage liability insurance also covers these types of damages.
Note that this type of insurance does not cover your own vehicle. Buy full coverage and collision coverage if you want to insure yourself against damage or theft of your own vehicle.
How much does liability insurance cost for property damage?
The average annual price for liability auto insurance (property damage liability and bodily injury liability) is $650.35, according to the most recent data from the National Association of Insurance Commissioners.
The average cost of liability insurance varies widely by state: the cheapest price for liability insurance is in North Dakota ($312.30 per year) and the most expensive is in Louisiana ($1,023.91 per year) ).
The cost of auto insurance, including property damage liability, is based on many factors, including your location, age, gender, driver’s license, credit, and more.
You can shop around for the cheapest car insurance rates by getting quotes from several insurance companies.
How much property damage liability coverage do I need?
It’s smart to buy enough liability insurance to cover what you might lose in a lawsuit. For example, high net worth car owners should have a high level of liability insurance, including property damage liability.
Consider at least $100,000 in property damage liability. If you cause an accident that damages several cars, for example, that $100,000 in coverage can be used up quickly. You’re still on the hook for damage costs that exceed your liability limits.
Liability limits of 100/300/100 mean:
- $100,000 for injuries per person
- $300,000 for accident injuries
- $100,000 for property damage per accident
The minimum the amount of liability insurance you should carry depends on the state, but these minimum limits are likely to be insufficient.
Best Car Insurance Companies for 2022
With so many car insurance companies to choose from, it can be difficult to know where to start to find the right car insurance. We’ve rated insurers to find the best car insurance companies, so you don’t have to.
Frequently Asked Questions About Property Damage Liability Insurance
Is property damage liability insurance required?
Property damage liability insurance is required by law in almost every state. The minimum amount of coverage required varies by state.
Even if you’re only required to carry a small amount of coverage — or none in your state — it’s a good idea to have enough liability insurance just in case you cause an accident. You are still legally liable for amounts that exceed your insurance limits if you cause an accident.
How do I file a property damage insurance claim?
If your property was damaged by another driver, you can file a claim with the other person’s insurance company. Be sure to share information at the scene, including the person’s name, insurance card information, and license plate number.
Take photos of the location if possible. File an accident report with the police – the insurance company may ask for a copy.
Know what to do after a car accident to protect yourself from other drivers who may want to take advantage of the situation.
Is there a deductible for property damage liability claims?
There is no deductible for property damage liability insurance. A deductible is the amount of money you are personally responsible for paying when there is a claim.