Quick Answer: Liability insurance covers the other driver's medical bills, lost wages, and vehicle damage when you are at fault. It does NOT cover your own injuries or your car — that's what collision, comprehensive, and health insurance are for.
What Liability Coverage Pays For
| Coverage Component | What It Pays | Who It Protects |
|---|---|---|
| Bodily Injury (BI) — per person | Medical bills, lost wages, pain and suffering per injured person | The other driver/passengers |
| Bodily Injury (BI) — per accident | Total for all injured parties combined | All injured parties |
| Property Damage (PD) | Repair or replacement of the other vehicle and any property | Other driver, property owners |
Not covered by liability: Your own medical bills, your vehicle damage, or injuries to you and your passengers. For that you need collision, comprehensive, MedPay, and/or PIP coverage.
Understanding Liability Limits — What the Numbers Mean
Liability limits are expressed as three numbers, e.g. 100/300/100:
- First number (100): Maximum paid per injured person — $100,000
- Second number (300): Maximum paid per accident across all injured parties — $300,000
- Third number (100): Maximum paid for property damage — $100,000
| Limit | Monthly Cost vs Minimum | Protection Level |
|---|---|---|
| State minimum (e.g., 25/50/25) | Baseline | Dangerously low — often inadequate for 1 hospital stay |
| 50/100/50 | +$5–$12/mo | Better, still inadequate for serious accidents |
| 100/300/100 (recommended) | +$15–$35/mo | Adequate for most drivers and asset levels |
| 250/500/250 (high asset) | +$25–$50/mo | Strong protection for homeowners and high earners |
| Umbrella policy (1M+) | +$15–$30/mo add-on | Comprehensive asset protection |
State Minimum Liability Requirements — 2026
| State | Minimum Liability | Is It Enough? |
|---|---|---|
| Florida | 10/20/10 (PIP state) | No — one of the weakest in the US |
| Texas | 30/60/25 | Marginal — upgrade to 100/300/100 |
| California | 15/30/5 | No — property damage limit is inadequate |
| New York | 25/50/10 | No — property damage dangerously low |
| North Carolina | 30/60/25 + UM required | Marginal — UM requirement is a plus |
| Michigan | 250/500/10 (new 2019) | BI is strong; property damage is still low |
Frequently Asked Questions — Liability Coverage
What does liability car insurance cover?
Liability pays for bodily injury and property damage you cause to others in an at-fault accident — medical bills, lost wages, pain and suffering, and vehicle repair for the other party.
How much liability coverage should I carry?
100/300/100 is the recommended minimum for most drivers. If you own a home, have significant savings, or earn a professional income, 250/500/250 plus an umbrella policy provides stronger asset protection.
What happens if my liability limits are too low?
If damages exceed your limits, you are personally responsible for the difference. Your wages, savings, and assets can be garnished or placed under lien to cover the gap. This is why state minimums are almost always inadequate.
Does liability cover my own injuries?
No. Liability only covers others. For your own injuries, you need MedPay, PIP (in no-fault states), or health insurance. For your vehicle, you need collision coverage.