Key takeaways

  • Property damage liability coverage pays for damage to another person's property if you are at fault for an accident.
  • Most states have minimum car insurance requirements that include property damage liability coverage.
  • You can choose your property damage liability coverage limit, which will determine the maximum amount your insurance will cover in case of an accident.
  • Property damage liability coverage does not cover your losses, such as your vehicle damage or medical bills.

The property damage liability portion of a car insurance policy is what pays for damage that a driver causes to another person’s property in an accident. In this context, “property” could include cars, homes, storefronts or stationary objects. It’s important to understand the level of coverage that your insurance provides and to pick an auto insurance policy that provides sufficient coverage in case of an accident. Here’s what you should know about property damage liability.

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What is the definition of property damage liability?

Property damage liability is the 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 others incur. 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, meaning you are determined to be at fault for the accident. It covers property like 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.

Note that property damage liability coverage does not cover your losses, such as your vehicle damage or medical bills. It specifically covers other people’s property. If your vehicle is damaged in an accident, or if you need medical treatment, optional coverage types like collision, comprehensive and medical payments coverage may help cover the costs.

Experts recommend reviewing your auto policy to see which coverage types are listed. If the coverage you’d like is not there, contact your insurance agent to add it before an accident occurs. You can compare quotes from multiple insurers to find insurance that provides the best coverage for your needs at a price you can afford.

Who needs property damage coverage?

Nearly every state has minimum car insurance requirements, which include 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.

Read more: Minimum car insurance coverage requirements in each state

How much does property damage coverage cost?

The cost of property damage coverage will depend on the car insurance policy that you have. Insurance premiums vary based on a variety of factors, including where you live and the type of car you drive, as well as your credit history, age and driving record. You can choose your property damage liability coverage limit, which will determine the maximum amount your insurance will cover in case of an accident. Typically, the higher your level of coverage, the higher your premium will be.

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. However, you may be required to have higher coverage limits if your vehicle is financed or 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 could provide peace of mind. Just remember that the more coverage you carry, the more expensive your insurance rates may 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:

  1. 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.
  2. Document the damage: When it is safe, document any property damage at the scene of the accident with photos and videos.
  3. 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.
    • The best amount of property damage liability depends on the level of coverage you need. As a general rule, you should make sure that you have enough coverage in case of a serious accident that may carry large costs. Experts recommend thinking through how much you can afford to pay out of pocket and how much coverage you require to feel protected.
    • 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).
    • No, property damage liability is not the same as collision coverage. Property damage liability covers the cost of repairing damage done to someone else’s property, including their vehicle. Collision coverage pays for the cost of repairing your own vehicle after an accident.
    • The cost of car insurance will depend on a number of factors including your location, vehicle make and model, driving record, credit history and other considerations. As of 2023, Bankrate research found the average cost of car insurance is $2,014 per year for a full coverage policy. However, you can shop around for cheaper car insurance that fits your budget.