What Is Property Damage Liability Coverage?


One of the major downsides to owning and operating a vehicle is the associated liability. Specifically, bodily injury and property damage liability.

Liability car insurance coverage is mandatory in nearly every state in the Union.

The thought goes; driving is a privilege, not a right.

And if you’re going to operate a vehicle on U.S. roadways, you better be able to pay for the medical and property damage expenses your negligence may cost another individual.

For our purposes, “property damage liability” refers to damage you cause to another person’s vehicle, property, and/or belongings as a result of your negligence while driving a car.

Basically, any accident you are found to be “at fault” for causing will make you liable for the damages.

What Property Damage Liability Is Not

This coverage does not apply to damage caused to your OWN vehicle as a result of an accident you cause. That would fall under physical damage coverage.

You must purchase a full coverage auto insurance policy, which includes comprehensive and collision coverage, in order to have your own vehicle repaired.

The difference between the two is explained here (property damage vs physical damage).

Try to remember it this way.

Property damage liability is mandatory and covers you for damaging someone else’s “stuff,” while physical damage is not mandatory (unless you have a loan or lease) and serves to protect your own vehicle.

How Much Do I Need?

As mentioned, “property damage liability coverage” is part of compulsory, or mandatory, liability insurance coverage.

Each State Department of Insurance sets their own minimum car insurance requirement.

So at the bare minimum, you need to purchase at least your state’s minimum coverage limits to remain legal.

The liability limits on your insurance policy are typically expressed in the following three number format: 50/100/25.

The third number in the series, in our example “25,” represents the property damage liability limit.

This means your insurance company will pay up to $25,000 in the event of any one accident you are found liable for, regardless of how many cars (or property) are damaged.

That’s right, it doesn’t matter how many cars are involved in the accident.

The maximum amount paid by the insurance company will be $25,000.

If the total cost of all the damages caused by you is under the property damage liability limit on your policy, you won’t have any problems.

Conversely, you’ll be on the hook if the dollar amount of damage exceeds your policy limit.

This is the main reason why you should carry the highest liability limits your budget will allow (We’re referring to your budget before you subtract your daily Starbucks run).

Contact your insurer or independent insurance agent if you’re unclear or unsatisfied with your current policy’s property damage liability limits.

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