What does liability car insurance cover?

Auto liability insurance is divided into two coverage types that work together: bodily injury liability (BI) and property damage liability (PD). Both are required by law in nearly every U.S. state because they protect others — not you — when you cause an accident. The III's auto insurance basics guide describes auto liability as paying for the policyholder's legal responsibility to others for bodily injury or property damage caused by an at-fault accident.

Bodily injury liability (BI)

Bodily injury liability pays for the medical expenses, lost wages, and pain-and-suffering damages of people you injure in an at-fault accident — the other driver, their passengers, or a pedestrian. It also covers your legal defense costs and any court-ordered damages, up to your policy limits. BI limits are expressed as two numbers: per person and per accident (e.g., 50/100 means $50,000 per injured person and $100,000 total per accident).

Property damage liability (PD)

Property damage liability pays to repair or replace property you damage in an at-fault accident — most commonly another vehicle, but also a fence, storefront, utility pole, or landscaping. PD is expressed as a single limit (e.g., $50,000 per accident). It covers the other person's property, not yours.

What liability does NOT cover

• Your own vehicle damage (collision and comprehensive cover that).
• Your own injuries or medical bills (covered by medical payments / MedPay or PIP).
• Injuries to your own passengers (same — MedPay or PIP).
• Losses that exceed your policy limits — you are personally liable for the difference.
• Intentional acts — if you deliberately cause damage, no policy covers it.

State minimums vs. adequate coverage

Every state (except New Hampshire) sets minimum liability limits — but minimums are often inadequate. A serious accident involving hospitalization, missed work, and a totaled vehicle can easily exceed a 25/50/25 minimum policy. The NAIC consumer guide recommends comparing your net worth and assets against your liability limits: if you're underinsured, a judgment can attach to wages or savings above the limits. Many financial planners recommend 100/300/100 or higher, supplemented by an umbrella policy.