Bodily Injury vs. Property Damage Liability

If you've looked at your insurance policy lately, you might have seen a couple of terms you're not familiar with — bodily injury liability and property damage liability. They both have "liability" in the name, but how similar are they? Direct Auto Insurance explains how they differ and why they're both important.

Auto liability insurance policies typically provide liability insurance for bodily injury and liability insurance for property damage, according to the National Association of Insurance Commissioners (NAIC). Most states require that drivers get coverage for both property damage and bodily injury liability. Additionally, even if your state doesn't require auto insurance, you might be required to get it if you drive a leased car or take out a loan to buy a car. 

Here's the inside scoop on how bodily injury liability and property damage liability compare. 

What is bodily injury liability?

Bodily injury liability insurance does not protect you or your car or anyone else’s property, notes the NAIC. Instead, it helps provide financial protection for you in case you cause an accident that injures or kills someone. The coverage pays for claims brought against you by the injured parties. The victims of an accident you caused can sue you for everything from medical expenses and lost wages to damages for pain and suffering. 

Here’s an example: You run a red light, and your car strikes another car. That car was going through the intersection on a green light, so it had the right of way. The driver of the other vehicle suffers head and neck injuries and a broken arm. If you have bodily injury liability insurance, your coverage can pay the medical bills of the injured driver and cover lost wages if that person misses work because of the injuries.

Bottom line: Bodily injury liability coverage applies to harm done to people. It does not apply to any property damage, your injuries, or typically to the injuries of your family members.

What is property damage liability?

Property damage liability insurance covers damage you do to other people’s property when there’s been a car accident. It pays for damage to things like the other vehicle(s) involved in the accident, buildings, fence, government property like utility poles, street signs, and guardrails, and even landscaping.

Here’s an example: You’re driving on a rainy road and lose control of your car. Your car slams into a parked vehicle. If you have property damage liability insurance, your policy could help cover the costs to repair the parked car.

Bottom line: Property damage liability coverage applies to harm done to other’s people’s property, not people.

How much liability coverage do I need?

When you're shopping for liability coverage, you need to figure out how much financial protection you'd need if you cause an accident that hurts other people or their property. If you're not sure where to start, you can get a policy that meets your state's minimum liability requirements until you talk to a local insurance agent that helps you assess your needs.

Whichever level of liability coverage you decide to get, it's essential to understand what having it means. For example, if you choose a policy that includes a 25/50/25 liability coverage, the most your insurance will pay in an accident where you are at-fault is:

  • $25,000 bodily injury liability insurance per person
  • $50,000 total bodily injury liability insurance per accident
  • $25,000 property damage liability per accident

Some motorists may consider buying more coverage than what's required. In the event that the cost of the damages you caused is higher than your liability limits, you may have to pay the excess amount out of your own pocket, possibly having to take out loans or sell your stuff to compensate the injured parties. In some cases, your future wages could get garnished until the damages are paid, reports Dave Ramsey.

Where can I get affordable liability coverage?

The physical, emotional, and financial consequences of a car accident can be daunting, but those consequences can be amplified without the right liability coverage. Help protect yourself and your assets with affordable bodily injury and property damage liability insurance from your local Direct Auto Insurance agent. We’ll help you find a policy that meets your needs and your state’s requirements. Call, click, or come in today to learn more.