What is property damage liability?

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All states require some form of liability insurance or proof of financial responsibility to drive on the road legally. Property damage liability insurance pays for damage you cause to another person’s property when you are at fault in an accident. While purchasing car insurance or renewing your current 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.

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 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 will 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, 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, many drivers are encouraged to purchase 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.

Ultimately, the amount of coverage you get is a personal choice. If you want the most protection possible, increasing your coverage limit can provide that peace of mind. Just keep in mind that the higher your coverage limit is, 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 will need to 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

Is property damage liability coverage required?

Yes, property damage liability insurance is required in almost every state. It is automatically included as part of your liability coverage, if you drop the coverage, you can face higher insurance rates when you get reinsured. Driving without the minimum required amount of coverage in your state is illegal and comes with consequences.

What factors determine the size of a claim?

The main factor that determines the size of a claim is the cost of the repairs. A claim that costs $200 is considered a small claim, whereas a $10,000 claim is much larger. More extensive claims are also more likely to impact your car insurance rate when your policy renews.

What’s the highest coverage limit for property damage liability insurance?

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.

What are other coverage types required for car insurance?

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).

Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth has two years of experience writing for insurance domains such as Bankrate.com, The Simple Dollar, Coverage.com and NextAdvisor, among others. In addition to auto insurance, Elizabeth regularly writes about home insurance, renters insurance and life insurance. She also covers industry trends and general insurance education.
Edited by
Senior Insurance Editor