Liability only insurance pays for damage or injury you cause to someone else, but not for damage to your own vehicle
Liability only insurance is the minimum coverage most states require you to carry. It covers medical bills, repair costs, and legal fees if you're found responsible for injuring someone or damaging their property in a car accident. It does not cover damage to your own car, medical bills for your own injuries, or losses from theft, weather, or hitting an uninsured driver.
This is the cheapest type of car insurance because it only protects the other person. If your car is worth very little, or if you own it outright and can afford to replace it, liability only may be the right choice. If you still owe money on your car, your lender will require you to carry more coverage.
Key Takeaways
- Liability only covers damage you cause to another person's car or property and their medical expenses, but nothing that happens to your own vehicle.
- Every state sets a minimum liability limit you must carry; these limits vary widely, from $15,000 to $50,000 per person depending on where you live.
- If you financed or leased your car, your lender will require you to carry collision and comprehensive coverage in addition to liability.
- Liability only leaves you personally responsible for your own car repairs, medical bills, and lost wages if you cause an accident.
What liability coverage actually pays for
Liability insurance has two parts: bodily injury liability and property damage liability. Bodily injury liability pays medical expenses, lost wages, and pain-and-suffering claims for people you injure. Property damage liability pays to repair or replace the other driver's car, fence, building, or other property you damage.
The insurance company also pays your legal defense if you're sued, even if the claim is false. This includes hiring a lawyer and covering court costs. The company will also negotiate a settlement on your behalf if possible, which usually keeps the case out of court.
Your state sets minimum liability limits, written as three numbers like 25/50/25. The first number is the most the insurer will pay for one person's injuries ($25,000 in this example). The second is the total for all injuries in one accident ($50,000). The third is the limit for property damage ($25,000). If the actual damages exceed your limit, you are personally responsible for the difference.
What liability only does not cover
Liability only does not pay for repairs to your own car, no matter who caused the accident. If you hit a parked car, a tree, or a guardrail, you pay for your own damage. If another driver hits you and they have no insurance or not enough insurance, you still pay for your repairs unless you carry uninsured motorist property damage coverage, which is optional in most states.
It also does not cover your own medical bills or lost wages. If you are injured in an accident you caused, your health insurance pays your medical costs. If you are injured in an accident someone else caused, you would need to file a claim against their liability insurance or sue them. Some states allow you to add medical payments coverage (also called med pay) to cover your own medical expenses regardless of fault.
Liability only does not cover theft, vandalism, weather damage, or hitting an animal. These losses fall under comprehensive coverage, which is optional unless your lender requires it.
Minimum liability limits by state
Every state except New Hampshire requires you to carry liability insurance. The minimum limits vary significantly. Some states require as little as $15,000 per person for bodily injury, while others require $50,000 or more. A few states allow you to post a bond or prove you have savings instead of buying insurance, but this is rare and usually more expensive.
Your state's minimum is the legal floor, not a recommendation. If you cause a serious accident, medical bills and repair costs can easily exceed the minimum. Many insurers recommend carrying limits of at least $100,000 per person and $300,000 per accident to protect your personal assets. You can increase your limits for a small additional premium.
When you must carry more than liability only
If you financed or leased your car, your lender requires you to carry collision coverage (which pays for damage to your car from an accident) and comprehensive coverage (which pays for theft, weather, and other non-accident damage). These requirements stay in place until you pay off the loan or the lease ends. Liability only will not satisfy your lender's contract.
If you have significant assets—a house, savings, or investments—you should consider carrying more than the state minimum. A lawsuit from a serious accident can result in a judgment against your personal property. An umbrella policy, which sits on top of your car and home insurance, costs $150 to $300 per year and covers damages that exceed your car insurance limits.
How liability limits work in an accident
When you cause an accident, the other driver's insurer investigates and determines fault. If you are found responsible, your insurer pays the claim up to your liability limit. If the damages exceed your limit, you are responsible for the overage.
For example, if your limit is $25,000 per person and the other driver's medical bills total $40,000, your insurance pays $25,000 and you owe $15,000. The other driver can sue you personally for the remaining amount. They can garnish your wages, place a lien on your home, or seize bank accounts to collect.
This is why many people carry higher limits than the state minimum. The cost difference between $25,000 and $100,000 in bodily injury coverage is usually $10 to $20 per month, but the protection is much greater.
Liability only versus full coverage
Liability only is the cheapest option because it only protects the other person. Full coverage typically means liability plus collision and comprehensive, which protects your own car. Full coverage costs two to three times more than liability only, depending on your car's value, your age, and your driving record.
The choice depends on your car's value and your financial situation. If your car is worth less than $5,000 and you have savings to replace it, liability only may make sense. If your car is worth $15,000 or more, or if you could not afford to replace it, collision and comprehensive are usually worth the cost. If you still owe money on your car, the choice is made for you—your lender requires full coverage.
Frequently Asked Questions
Does liability insurance cover me if I'm hit by an uninsured driver?
No. Your liability insurance only covers damage you cause to others. If an uninsured driver hits you, you would need uninsured motorist coverage to cover your own repairs and injuries. This is optional in most states but required in a few. Check your state's requirements and consider adding it if you live in an area with many uninsured drivers.
What happens if I cause an accident and my liability limit is too low?
Your insurance pays up to your limit, and you are personally responsible for the rest. The other driver can sue you and potentially garnish your wages, place a lien on your home, or seize bank accounts. This is why carrying limits higher than the state minimum is often recommended.
Can I increase my liability limits after an accident?
You can increase your limits at any time, but the increase only covers accidents that happen after the change takes effect. It does not cover an accident that already happened. If you are involved in an accident, contact your insurer when ready—do not wait to increase your limits.
Is liability only insurance enough if I have a car loan?
No. If you financed your car, your lender requires collision and comprehensive coverage in addition to liability. Liability only will not satisfy your loan agreement, and your lender may purchase coverage on your behalf and charge you for it, which is more expensive than buying it yourself.
How much does liability only insurance cost?
Cost varies by age, driving record, location, and insurer. Liability only typically costs $30 to $100 per month for a clean driving record, but can be higher if you have accidents or violations. Get quotes from multiple insurers to compare rates in your area.