What Does Liability Insurance Cover? Understanding Auto Insurance Coverage Options
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Liability insurance is a critical part of auto insurance coverage. It protects you when you are at fault for an accident, helping pay for the other person’s injuries or property damage. But it’s just one piece of your insurance puzzle—and many drivers don’t know exactly what liability coverage includes, what it doesn’t, or how much is enough under the law.
Call us at (972) 848-4848 if you’ve been in a crash or want help reviewing what your policy covers.
What Is Liability Insurance?
Defining Liability Insurance and Why It Matters
Liability insurance is a type of auto insurance that helps protect you financially if you cause an accident. It does not cover your own injuries or damage to your vehicle—but it does cover certain costs for others: bodily injury (medical expenses, lost wages, etc.) and property damage to their car or property. When you’re held liable for an accident, your liability coverage steps in to help pay those costs.
Where Liability Insurance Applies
Liability insurance applies whenever you’re at fault in a collision or auto accident. It’s required by law in Texas, as in most states, and is typically included in auto insurance policies. We also hear of “general liability insurance,” but that typically refers to business liability (for non-auto incidents). In this article, we focus on auto liability insurance and how it protects third parties from damage or injury when you cause an accident.
How Does Liability Insurance Coverage Work in Auto Insurance Policies?
The Basics of Auto Liability Coverage
When you cause an accident, liability coverage steps in to cover damage and injuries to others. For example, if you rear-end someone, your liability insurance helps pay for their medical treatment (bodily injury liability) and repairs to their vehicle (property damage liability). The insurance company for your policy will investigate, determine fault, and then pay out according to your policy’s liability coverage limits.
How Insurance Companies Handle Claims
After an at-fault auto accident, a claim is filed. Your insurance company communicates with the injured parties’ insurers or claimants. They’ll assess the damage, the medical bills, and whether fault lies with you. The insurer then pays up to your liability limits. If costs exceed those limits, you may be responsible for the rest. It’s crucial to understand your liability limits so you know how much the insurance company provides coverage, and what exposure you have beyond that.
What Does Auto Liability Insurance Typically Cover?
Bodily Injury Liability Coverage
Bodily injury liability coverage is the portion of liability insurance that pays for medical expenses, lost income, rehabilitation, and possibly legal costs for other people injured in an accident you caused. If you hit another driver and they require a hospital stay, physical therapy, or miss work, this coverage helps cover the associated bills. It protects others, not yourself (unless you add extra coverages).
Property Damage Liability Coverage
Property damage liability coverage pays for damage you cause to another person’s property. That might be their car, a fence, a mailbox, or even a building. If you’re liable for damaging another’s vehicle or structure in an auto accident, this part of your liability car insurance will help pay for the repair or replacement up to the policy’s limit.
What Are Common Types of Liability Coverage in Auto Insurance?
Bodily Injury vs. Property Damage
Auto liability insurance comprises two main types of liability: bodily injury liability and property damage liability. The first handles injuries to others; the second handles damage to their property. Both are part of liability coverage in almost every car insurance policy. You usually choose limits separately or in a combined form (for example, split‐limits).
Coverage Limits and How They Work
Liability coverage limits are how much your insurance company will pay per person, per accident, and for property damage. For example, a liability car insurance policy might limit bodily injury to a specific dollar value per injured person, a higher total dollar value per accident (even if multiple people are hurt), and a cap for property damage. Once those limits are reached, you may be responsible for any excess costs. These limits are crucial because medical bills, repair bills, or property damage can escalate rapidly.
What Does Liability Insurance Not Cover?
Damage to Your Car
Liability auto insurance doesn’t cover damage to your own vehicle. So, if you’re in an accident and your car is damaged, your liability policy won’t cover the cost of fixing your vehicle. That’s where optional coverages, such as collision coverage or comprehensive coverage, come in. Without those, you’d have to pay out of pocket for your vehicle damage.
Personal Injuries for the At‑Fault Driver
If you are the driver at fault, liability insurance usually does not cover your own medical costs for injuries you sustain. If you want protection for your own injuries, you’d need medical payments coverage (MedPay), personal injury protection (PIP, where available), or your health insurance. Liability coverage is about protecting others, not yourself.
Property Damage Liability Coverage
Property damage liability coverage pays for damage you cause to another person’s property. That might be their car, a fence, a mailbox, or even a building. If you’re liable for damaging another’s vehicle or structure in an auto accident, this part of your liability car insurance will help pay for the repair or replacement up to the policy’s limit.
Speak With A Lawyer Regarding Your Auto Insurance
What Are Common Types of Liability Coverage in Auto Insurance?
Bodily Injury vs. Property Damage
Auto liability insurance comprises two main types of liability: bodily injury liability and property damage liability. The first handles injuries to others; the second handles damage to their property. Both are part of liability coverage in almost every car insurance policy. You usually choose limits separately or in a combined form (for example, split‐limits).
Coverage Limits and How They Work
Liability coverage limits are how much your insurance company will pay per person, per accident, and for property damage. For example, a liability car insurance policy might limit bodily injury to a specific dollar value per injured person, a higher total dollar value per accident (even if multiple people are hurt), and a cap for property damage. Once those limits are reached, you may be responsible for any excess costs. These limits are crucial because medical bills, repair bills, or property damage can escalate rapidly.
What Does Liability Insurance Not Cover?
Damage to Your Car
Liability auto insurance doesn’t cover damage to your own vehicle. So, if you’re in an accident and your car is damaged, your liability policy won’t cover the cost of fixing your vehicle. That’s where optional coverages, such as collision coverage or comprehensive coverage, come in. Without those, you’d have to pay out of pocket for your vehicle damage.
Personal Injuries for the At‑Fault Driver
If you are the driver at fault, liability insurance usually does not cover your own medical costs for injuries you sustain. If you want protection for your own injuries, you’d need medical payments coverage (MedPay), personal injury protection (PIP, where available), or your health insurance. Liability coverage is about protecting others, not yourself.
How Much Liability Coverage Do You Need?
Minimum State Insurance Requirements (Texas 30/60/25)
In Texas, drivers are legally required to carry at least 30/60/25 liability insurance. That means:
- $30,000 bodily injury liability per person injured in an accident you cause.
- $60,000 bodily injury liability total for all persons injured in that same accident.
- $25,000 property damage liability per accident (damage to another person’s car or property)
Having at least that amount (liability car insurance meeting the 30/60/25 minimum) means you’re complying with state law.
When to Increase Your Liability Coverage
While the 30/60/25 minimum ensures legal compliance, it may not be sufficient in serious accidents. Medical costs, repair bills, and damages often exceed those limits. If you have assets to protect (such as a home, savings, or investments), you should consider higher liability limits—for example, $100,000/$300,000/$100,000 or more. Higher liability coverage limits reduce the chance you’ll have to pay out-of‑pocket if the insurance company maxes out on what it covers.
Liability Insurance vs. Collision and Comprehensive Coverage
Understanding the Differences
- Liability coverage pays for damage and injury you cause to others.
- Collision coverage helps pay to repair or replace your vehicle when you hit another object, car, or roll over.
- Comprehensive coverage protects against damage from non-collision events, including theft, vandalism, weather-related incidents (such as hail or flooding), and hitting a deer, among others.
Which Type of Coverage Do You Need?
If your car is older or has low value, you may consider opting out of collision or comprehensive coverage. However, if you have a newer car, a loan/lease, or you want more extensive protection, those coverages can be essential. Liability is required, but adding extra coverages means you’ll be less at financial risk if your car is damaged or stolen.
Do Business Owners Need General Liability Insurance?
What General Liability Insurance Covers
Business liability insurance (or commercial general liability) covers injuries or property damage that your business operations cause to others—not auto accidents necessarily, but other harm (slips, product defects, advertising injuries). It helps protect your business’s assets in the event of a lawsuit.
Commercial General Liability Insurance Policies
If your business uses vehicles for business operations (deliveries, transporting clients, etc.), you may need auto liability plus business liability. Commercial general liability insurance helps cover risks outside driving, while auto liability insurance handles vehicle‑related accidents. If vehicles are used in your business, ensure your auto insurance policy is appropriate or that you have commercial auto insurance.
What Happens If You Don’t Have Enough Liability Coverage?
Out‑of‑Pocket Costs After an Accident
If the cost of injuries and damage caused by you exceeds your liability coverage limits, you are responsible for the difference. For example, if you injure several people and your bodily injury liability limit per accident ($60,000 in Texas’s minimum) is exceeded, you could be sued or potentially have to pay from savings or other assets to cover the rest.
Legal Exposure from Liability Claims
Insufficient liability coverage exposes you to legal risk. If someone sues you, and your insurance doesn’t fully cover the judgment, you may be required to pay the difference. That could mean losing assets or facing liens. That’s why many people purchase higher limits and consider umbrella policies (an extra layer above your standard liability insurance) to safeguard against large claims.
How Can You Get the Right Liability Coverage for Your Situation?
Reviewing Your Auto Insurance Policies
When reviewing your car insurance policy, it’s essential to consider more than just the premium. Pay attention to the specific liability coverage limits and optional protections that may affect you after an accident. Key items to review include:
- The bodily injury liability limits, both per person and per accident
- The property damage liability limit, which applies to another vehicle or property you damage
- Any exclusions that limit what your insurance covers
- Optional coverages that may be included or rejected in writing, such as uninsured or underinsured motorist coverage
- The deductible amounts for collision and comprehensive coverage
- Taking time to carefully read your policy helps you understand what your insurance would pay for and where you may need stronger coverage to protect yourself financially.
Working With an Insurance Agent
An insurance agent or insurance company representative can help you understand what liability insurance helps protect, what premiums look like for higher coverage, and whether an umbrella policy might make sense. They can also help you balance the premium cost with the risk you want to assume. It’s worth talking with agents and personal injury attorneys licensed in Texas to explore options beyond the minimum 30/60/25 liability coverage.
Does Liability Insurance Cover Medical Expenses for Passengers in My Car If I Cause the Accident?
Yes. Liability insurance will cover medical expenses for your passengers if you are found at fault for a crash. Under liability insurance, your passengers are considered third parties, which means their injuries fall within your bodily injury liability coverage. This can include hospital bills, rehabilitation, and other medical costs.
However, liability coverage does not extend to your own injuries as the at-fault driver. To cover yourself, you would need medical payments coverage (MedPay), personal injury protection (PIP), or rely on your personal health insurance. Adding these optional protections can help close the gap in your auto coverage.
If Someone Without Insurance Hits Me, Will My Liability Insurance Cover Me?
No. Liability insurance is designed to pay for damages you cause to others—not damage caused by someone else. If an uninsured or underinsured driver collides with you, your liability coverage will not provide compensation for your injuries or property damage.
To protect yourself in this situation, you need uninsured/underinsured motorist (UM/UIM) coverage. This type of coverage helps pay medical bills, lost wages, and repair costs when the at-fault driver doesn’t have adequate insurance. Without UM/UIM coverage, you could be left paying those expenses out of pocket.
What Happens If the Cost of Damage Exceeds the $25,000 Property Damage Limit in Texas’ Minimum Policy?
Texas’ minimum liability insurance requires at least $25,000 in property damage liability coverage per accident. While this may be enough to cover minor collisions, it often isn’t sufficient for accidents that involve newer vehicles or multiple cars. For example, if you cause a crash that totals a luxury SUV worth $70,000, your insurance will only pay $25,000—leaving you responsible for the remaining $45,000.
This financial risk is why many drivers purchase higher liability coverage limits, such as $100,000 or more for property damage. Increasing your liability limits provides stronger financial protection and helps avoid devastating out-of-pocket expenses.
Is Liability Insurance Enough on Its Own?
Liability insurance meets Texas’ legal requirements, but it usually isn’t enough to provide complete financial protection. Serious accidents involving multiple injuries or costly vehicles can quickly exceed the minimum 30/60/25 coverage limits, leaving you personally responsible for the excess.
To better protect yourself, consider adding other types of coverage, such as collision coverage for damage to your car, comprehensive coverage for theft or weather damage, PIP or MedPay for medical costs, and UM/UIM coverage for uninsured drivers. Together with higher liability coverage limits, these options help ensure you aren’t left financially exposed after an accident.
Talk to an Auto Accident Lawyer About Liability Car Insurance Coverage
If you’ve been in an auto accident, are unsure what your car insurance policy covers, or want to evaluate whether your liability coverage limits are enough, reach out to us. Our personal injury lawyers can review your policy and explain your rights, enabling you to protect your assets after a crash.
Call us today at (972) 848-4848 for a free consultation with an experienced car accident attorney.