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What does liability insurance cover?

Written by State Farm® Editorial Team

Discover what liability car insurance covers, including bodily injury (BI) and property damage (PD), with examples of covered expenses.

Overview: Liability car insurance is a key part of any auto insurance policy and is often required by law in most states. It helps cover costs for others involved in a car crash if you are at fault, in the case of a covered claim or loss. This article explains how bodily injury (BI) liability can help pay for­ medical bills, lost wages and legal fees. Property damage (PD) liability helps cover repairs to vehicles or other property, such as fences, in the event of a covered loss. Learn how liability insurance coverage can help protect you financially when you’re responsible for injuries or property damage caused by an accident.

What liability insurance covers: Bodily injury and property damage

Auto liability coverage has two main parts, both designed to help with costs you might owe others when you're responsible for an accident:

Bodily injury (BI) liability — helps pay for medical costs and related expenses if you injure someone in a crash.

Property damage (PD) liability — helps pay for repairs or replacement of someone else's property that you damage.

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Here’s a look at the kinds of expenses each type of liability insurance covers when you are at fault for an accident:

Liability component

Examples of expenses it may cover for others

Bodily injury (BI)

Medical bills (hospital, doctor, therapy, ambulance), lost wages (if unable to work due to injury), pain and suffering (sometimes), legal fees (defense if sued) and funeral costs

Property damage (PD)

Vehicle repairs (car, truck, motorcycle), vehicle replacement (if totaled), repair/replacement of other property (fences, mailboxes, buildings) and rental car costs for others

Bodily injury liability: How it helps people you hurt

If you’re found legally responsible for an accident that injures others, BI liability coverage comes into play in the case of a covered loss. This insurance doesn’t pay for your own injuries, it’s meant to help people you may have harmed.

Medical bills — this is one of the most common expenses. Your liability insurance helps pay for things like ambulance rides, emergency room visits, hospital stays, doctor appointments and therapy sessions for the injured person.

Example: After a collision at a stoplight, the other driver needs emergency treatment. Your BI liability may help pay for their hospital bill and physical therapy.

Lost wages — if the injured person can’t work during recovery, liability coverage can help cover their missed earnings.

Example: The person you hit breaks a leg and can’t work their job for several weeks. Your policy’s BI coverage can pay their lost wages.

Pain and suffering — includes non-economic damages such as physical pain or emotional distress.

Legal fees — if you’re sued over the accident, your BI coverage can help with legal defense costs.

Example: After a serious crash, the other driver files a lawsuit. Your BI coverage may help pay for your defense lawyer.

Funeral costs — if the accident you caused results in a fatality, liability coverage may help cover funeral expenses incurred for the deceased.

Property damage liability: Repairing and replacing damaged property

Property damage liability helps cover the cost to repair or replace property you damage in an at-fault crash. Usually, this involves someone else’s vehicle, but it can include much more.

Other property damage — this coverage also helps with costs to fix or replace other items you hit, like fences, mailboxes, street signs or buildings.

Example: Your vehicle slides on ice and crashes through someone’s fence. PD liability can help pay for the fence repairs.

Rental car costs — if the other person needs a rental car while their vehicle is being fixed, your liability insurance might help pay for that.

What liability insurance does not cover

Liability coverage is only for damage and injuries you cause to others. Here’s what liability insurance does not pay for:

Your medical bills from an accident you caused.

Repairs to your own vehicle after a crash for which you are at fault.

To get coverage for your injuries or car damage, you need other types of coverage like collision, comprehensive or Medical Payments Coverage (Med Pay)/Personal Injury Protection (PIP).

Why choosing the right liability coverage limits matters

Every insurance policy has limits, or the maximum amount it will pay out. It's important to choose liability insurance limits that can help protect you and your family in the event of a serious accident—medical bills and property damage can be much higher than the minimum required by law.

Having enough liability coverage can help protect your savings and property if you're found responsible for a costly accident. Choosing limits higher than the state minimums offers better financial protection.

Auto liability coverage can help you handle the unexpected—and help shield you from serious financial risk if the worst happens on the road.

To discuss your specific needs or learn more about the types of liability insurance available, talk to a local insurance agent or get an online quote to help ensure you have coverage that fits your life and budget. 

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

Please remember that the preceding descriptions contain only a general description of available coverages and are not a statement of contract. All coverages are subject to all policy provisions and applicable endorsements. Coverage options may vary by state. To learn more about auto insurance coverage in your state, find a State Farm agent.

Individual premiums and budgets will vary by customer. All applicants subject to underwriting requirements.

This article was drafted with the help of AI and reviewed by State Farm editors.

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