Understanding Auto Insurance: What Is Property Damage Liability?

This article is part two in a series on auto insurance coverage. Read part one here and stay tuned for the rest.

Whether a minor dent or a total wreck, automobile accidents can cause significant financial burdens if you don’t carry the proper insurance.

“Auto insurance” is often used as a blanket term because there are different forms of automobile insurance coverage that protect different damages and situations. Most states in the U.S. require car owners to have some form of auto insurance to protect their residents from the high costs associated with car accidents. Some of these coverage types include:

• Bodily Injury Liability
• Personal Injury Protection (PIP)
• Personal Damage Liability
• Collision
• Comprehensive
• Uninsured/Underinsured Motorist Coverage

If you cause an accident, chances are you’ve also caused some damage to another car or another object that might be someone else’s personal property. Can your auto insurance help?

Indeed it does. Property damage liability covers the damage you cause to another individual’s vehicle or property. If you are found at fault for an accident, property damage liability can help pay for any damages caused to the other person’s property.

In this article, we will discuss what property damage liability covers, the state requirements, the amount of coverage you should consider, and how to make a claim.

What Does It Cover?

Property damage liability can help pay for damages of another person’s property if you are found at fault for the accident or damage. It can help pay for any types of repair to the vehicle that directly stem from the accident, including auto body shop labor, replacement parts, and mechanics. This “property damage” may also extend beyond vehicles to other forms of property, such as a fence, building or house front, pole, lamppost, mailbox, or even shrubbery.

Property damage liability may also pay for attorney and legal defense fees if a claim is filed against you with regards to retribution for the property damage. Some insurance companies will even pay out lost income if a business was forced to close due to the accident. 

This property damage liability does not cover damages to your own vehicle (whether or not you are found at-fault). Damages to your own vehicle would likely be covered under collision or comprehensive coverage. Think of property damage liability (another’s damaged property) as similar to bodily injury liability (damage done to another person physically); collision coverage (damage to your car) would be similar to personal injury protection (damage to you personally).

Is It Required?

Most states require both bodily injury and property damage liability coverage to protect all citizens and to free up the court system from frequent automobile accident lawsuits.

Property damage is often linked to bodily injury coverage in policies, and the plans are often listed as three numbers, like $10,000/$5,000/$15,000. If you see your coverage written this way, the first two numbers are split bodily injury coverage and the third ($15,000 here) is the maximum property damage liability. “Maximum” means that the insurance company will pay up to that amount for property damages. Any additional expenses would be the policyholder’s responsibility to pay to the affected individual.

Below is a table with the minimum required coverage for property damage liability for many of our states. If you are from out of the area, check with your local DMV’s website to see your state’s minimum.

How Much Coverage Do You Need?

While those are the minimums required per state, you may decide to get more coverage. Unlike bodily injury liability where you should make sure all of your assets would be covered, property damage liability usually requires enough to cover general repairs. Because this coverage only focuses on the damage of property, you would not be sued for pain and suffering or long-term medical expenses. In this way, you want enough coverage to ensure that you could easily pay for the damage of some form of high-value property. 

Coverage typically ranges from $5,000 to $100,000 based on the insurance company. Work with an insurance agent and get a quote to see what coverage and corresponding premium would work best for you, your assets, and your situation. 

What Does A Claim Look Like?

Property damage liability covers the damage you do to someone else’s property if you are found at-fault for an auto accident. Thus, others would submit a claim or lawsuit against you, often through a third party. Then, the amount of property damage liability coverage you have will dictate how much your insurance company will pay out for a single accident.

If the cost of damages exceeds the property damage liability, then that individual may go directly to you—the policyholder—to recover the excess costs. This can lead to either a settlement or a lawsuit.

Bottom Line

If you are found at fault for an accident, don’t pay out of pocket for the other person’s property damages, see if your insurance policy will handle the cost of the damages.

Get a quote from InsuraMatch in less than 10 minutes or call an agent at 844-232-2700 to find the right coverage for you!