What Does Property Damage Liability Cover?

Property damage liability pays for damage you cause to other people's property in a crash you are responsible for. That usually means the other driver's car, but it also includes things like fences, buildings, utility poles, signs, and trees, which is how the Illinois Department of Insurance defines the coverage. It does not pay to repair your own car. That job belongs to collision coverage, if you bought it.

It is one half of the liability coverage almost every state requires you to carry. The other half, bodily injury liability, pays for injuries you cause to other people. Together they are the part of your policy that protects other people from you, and protects you from paying for their losses yourself.

What property damage liability pays for

The coverage responds when someone else's property is damaged and you are legally responsible. Common examples:

• The other driver's car when you rear-end them or back into them in a parking lot
• A parked car you hit, even if nobody was in it
• A fence, mailbox, garage door, or storefront you drive into
• Public property such as a utility pole, a street sign, or a guardrail
• Landscaping and trees on someone else's land

New York's Department of Financial Services describes liability coverage as protecting you, and anyone driving your car with your permission, when another person makes a claim alleging you were negligent or otherwise at fault. New York also requires your insurer to provide a legal defense against those claims without reducing your liability limits. That defense is part of what you are buying, not just the check to the other party.

What it does not cover

The most common surprise is that liability coverage does nothing for your own vehicle. The Washington Office of the Insurance Commissioner says property damage liability typically will not cover damage to your own car or motorcycle, which is why some drivers also add collision coverage. If you carry only liability and you cause a crash, the other driver's repairs are paid and yours are not.

• Damage to your own car, which is collision coverage
• Theft, hail, fire, flooding, or hitting an animal, which is comprehensive coverage
• Injuries to other people, which is bodily injury liability
• Injuries to you and your passengers, which is medical payments or personal injury protection, depending on your state
• Damage you did not cause, which is a claim against the at-fault driver's liability coverage instead

How state minimums work

Each state sets the least property damage liability you can legally carry, and the numbers vary. A few examples straight from state regulators:

• New York requires at least $10,000 per accident, which is why its minimum limits are often written as 25/50/10
• Washington requires at least $10,000 of property damage liability
• Illinois requires property damage liability limits of at least $20,000 per accident

The property damage figure is the last number in the three-number shorthand you see on quotes and declarations pages. In New York's 25/50/10, the 25 and 50 are bodily injury limits in thousands of dollars and the 10 is the property damage limit. Check your own state's requirement before you buy, because the minimum where you live may be different from any of these.

If you drive in another state with higher requirements, your policy may follow you. New York, for example, says that when your vehicle is used in another state or Canadian province that requires higher liability limits than you bought, your policy will provide the limits that jurisdiction requires. Other states write their own rules, so ask your insurer how your policy handles out-of-state driving.

Why the minimum can fall short

A property damage limit is the most your insurer will pay for all the property you damage in one accident. It is a per-accident cap, not a per-car cap. If you hit two vehicles, or one vehicle and a building, everything comes out of the same limit. Anything above it can become your responsibility, and the other party can pursue you for the difference.

That is why many drivers buy more than the legal minimum. Newer vehicles, multi-car crashes, and damage to commercial property can each cost far more than a minimum limit was designed to handle. There is no single right number. The usual approach is to think about the kind of traffic you drive in and what you could afford to pay out of pocket if a claim went over your limit, then compare the price of a few higher limits on the same quote.

How to choose a limit

• Start with your state's legal minimum as the floor, never the target
• Ask for quotes at two or three higher property damage limits and compare the price difference
• Consider the vehicles around you; a crash involving a newer car or a commercial vehicle can exceed a low limit
• If you have savings or a home to protect, weigh higher liability limits more heavily
• Remember that liability limits are separate from collision; raising one does not fix your own car

The bottom line

Property damage liability pays for the other person's car and property when you cause a crash, and it never pays for your own vehicle. Your state sets a minimum, and some minimums are low compared with what a single crash can cost. Treat the minimum as a starting point, compare the cost of higher limits on the same quote, and pair liability with collision if you need your own car covered too.