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Car insurance is something that nearly every driver is required to have by law to get behind the wheel of a car, though some states make exceptions for drivers who can offer proof of financial responsibility. A car insurance policy protects drivers financially in the event of an accident, and property damage liability insurance is one type of coverage that is included in auto insurance policies.
Property damage liability coverage is what pays for damage that a driver causes to another person’s property in an accident, whether it’s a vehicle or some other type of property. When purchasing car insurance or renewing your current car insurance policy, it is important to understand what is and is not covered under property damage liability and how much coverage you should carry on your auto policy.
What is property damage liability coverage?
Property damage liability is a part of a car insurance policy that helps pay to repair damage caused to another person’s vehicle or property. The coverage does not pay for damage to your own vehicle if you are at fault for the accident. However, if you are involved in an accident and are determined to be responsible for it, you may be able to file a claim with your property damage liability coverage to pay for another person’s damaged vehicle, property or even structures.
How does property damage liability work?
With liability insurance coverage on an auto policy, part of that coverage pays for property damage to others. If you cause an accident and damage someone else’s property, your insurance company will pay on your behalf up to the coverage limit listed on your insurance policy’s declarations page.
Most states offer split coverage limits, while others also offer combined single limit liability insurance policies. With split limits, there is a limit per person and per accident that the insurance will pay. For example, a split limit policy listed as 100/300/50 means you have liability coverage up to:
- $100,000 per person for bodily injury liability
- $300,000 per accident for bodily injury liability
- $50,000 per accident for property damage liability
In this example, the most the auto insurer would pay is $50,000 for property damage you cause in an accident. Any amount owed above your coverage limit would be your responsibility to pay out of pocket.
With a combined single limit, you have one amount to help pay for all the liability you are responsible for in an at-fault accident. For example, a combined single limit of $300,000 means you have up to $300,000 the auto insurer will pay for the entire accident, including bodily injury and property damage.
What does property damage liability cover?
Property damage liability covers another person’s property if you cause damage from an at-fault accident. It covers property, including cars, houses, fences, mailboxes and business storefronts. It also covers public property, like light poles or road signs, that might be damaged in an accident.
This coverage type can also cover your legal fees if you are involved in a major property damage claim and have to go to court. If you crash into a business storefront and it has to close for repairs, your car insurance company may also cover the owner’s lost revenue.
Property damage liability coverage does not cover your losses, like vehicle damage or medical bills. It specifically covers other peoples’ property. If your vehicle is damaged in an accident, or if you need medical treatment, your optional collision, comprehensive and medical payments coverage may help cover the costs. Review your auto policy to understand if these coverages are listed and if they are not, contact your insurance agent if you need them added before an accident occurs.
Who needs property damage coverage?
Nearly every state requires some form of minimum car insurance requirements, which includes property damage liability.
For example, Massachusetts drivers are required to carry at least a minimum of $5,000 in property damage liability coverage. Alabama drivers are required to have at least $25,000 in property damage liability coverage. Regardless of how often you drive, you are legally required to carry at least the minimum amount of auto coverage or show proof of financial responsibility in the state where you live.
How much does property damage coverage cost?
The cost of property damage insurance depends on your car insurance premium. However, certain criteria like your age (in most states), state, claims history, credit score (in most states) and the type of car you drive can all impact your rate. Another thing that affects the cost of property damage liability is the amount of coverage you have.
How much liability coverage should you get?
Drivers must carry at least the minimum amount of property damage liability insurance required in their state. Without the minimum coverage, you can get cited for driving without adequate insurance, which comes with a fine (at a minimum) and usually a requirement to carry an SR-22 certificate.
However, drivers should consider purchasing more liability coverage than what is required. There is no guarantee that the state’s minimum required coverage limit is enough to cover the full cost of an accident. If you only have $5,000 in coverage and cause $25,000 in property damage, you could be responsible for the $20,000 difference.
The amount of coverage you get is a personal choice in most cases. Sometimes, you may be required to have higher coverage limits if your vehicle is leased or if you must carry an FR-44 certificate. In most cases, though, the liability limits are up to you to choose. If you want the most protection possible, increasing your coverage limits can provide that peace of mind. Just keep in mind that the more coverage you carry, the more expensive your insurance premium will be.
How do you file a property damage liability claim?
Filing a property damage liability claim is similar to any other type of car insurance claim. Although the exact steps will vary based on your insurance company, here are the steps you might take if you caused the damage:
- Find the property owner: After the incident occurs, find the property owner and get their contact information. If they are not around, leave a note with your name, phone number, insurance company and policy number.
- Document the damage: When it is safe, document any property damage at the scene of the accident with photos and videos.
- Contact your auto insurer: Contact your insurance company and notify them of the incident. You’ll be asked to provide some paperwork and provide photo and video evidence of the damage. Your claims adjuster will work with the other party to determine the repair cost and fix the damage you caused.
You should also check with your provider to see if it has any additional requirements.
Frequently asked questions
Yes, property damage liability coverage is required by law in most states and is automatically included as part of your liability coverage. However, the amount of property damage coverage you are required to purchase depends on the state. Most states have a minimum amount of property damage coverage that you must carry, but the coverage amount can also vary if you drive a leased vehicle. Because your leasing company has a financial interest in your vehicle, they might require you to carry a policy with higher coverage limits than the state minimum.
The most important factor that determines the size of a claim is the cost of repairs, which could be a few hundred dollars or thousands of dollars. For example, if you back into a parked car and cause damage that costs $200 to repair, your property damage coverage would likely be considered a small claim. However, if you run off the road and hit a fence that costs $10,000 to repair, the property damage liability claim would be much higher at $10,000. More extensive claims may have a higher impact on your car insurance rate when your policy renews.
Every insurance company has different maximum limits for property damage liability insurance. However, most providers offer coverage limits as high as $100,000. Some auto insurers may offer limits beyond $100,000 per accident. If you want liability coverage beyond what your insurer offers on your auto insurance policy, an umbrella policy may be worth considering.
In addition to property damage liability coverage, most states require drivers to carry bodily injury liability coverage, with minimum coverage limits per person and per accident. Additionally, some drivers are required to carry uninsured and underinsured motorist coverage and personal injury protection (PIP).