What is property liability insurance?  – Forbes consultant

What is property liability insurance? – Forbes consultant

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When you hit the road, the last thing you expect to happen is an accident. Not to mention the one you caused. However, most states require car owners to carry a minimum level of car insurance so that drivers have a way to pay for accidents they cause.

Here’s how to understand property liability insurance.

What is property damage liability?

Property damage liability is a type of insurance that, along with personal injury liability, ensures that drivers can pay for losses when they are at fault in an accident. If you cause damage to someone else’s vehicle or property, that’s when property damage liability insurance starts.

Property liability insurance is required by law in almost all states, with two exceptions:

  • There is no state-mandated insurance law in New Hampshire (although some drivers in New Hampshire are required to purchase auto insurance, such as drivers who have caused an accident before).
  • In Virginia, car owners can pay a $500 uninsured motor vehicle fee if they don’t want to buy liability coverage.

Even if your state doesn’t require auto insurance, it’s smart to have it.

What does property liability insurance cover?

Property damage insurance covers two main types of damage you cause to other people:

Another person’s vehicle. Whether you accidentally scrape someone’s bumper while backing out of a parking space, or cause an accident involving another driver’s vehicle, you are financially responsible for the damages. Property damage liability will pay for this damage to the vehicle, including the cost of repairing or replacing the other person’s vehicle, up to the limit specified in your policy.

Another person’s property. Let’s say you swerve to avoid an animal on the road and crash into someone’s fence. Or you accidentally ran over your neighbor’s mailbox. Liability insurance for property damage also covers these types of damage.

Please note that this type of insurance does not cover your own vehicle. Buy comprehensive and collision coverage if you want to insure against damage or theft of your own vehicle.

How much does property liability insurance cost?

The average annual cost of motor vehicle liability insurance (property damage liability and personal injury liability) is $650.35, according to the latest data from the National Association of Insurance Commissioners.

The average cost of liability insurance varies quite a bit by state: The cheapest liability insurance is in North Dakota ($312.30 per year) and the most expensive is in Louisiana ($1,023.91 per year).

The cost of car insurance, including property liability, depends on many factors, including your location, age, gender, driving record, credit and more.

You can shop for the cheapest car insurance rates by getting quotes from several insurance companies.

How much property damage coverage do I need?

It is wise to purchase sufficient liability insurance to cover what you may lose in a lawsuit. For example, car owners with high net worth should have liability insurance, including property damage liability.

Consider property damage liability of at least $100,000. For example, if you cause an accident that damages multiple cars, $100,000 in coverage can quickly run out. You are still on the hook for the cost of damages that exceed your liability limits.

Liability limits of 100/300/100 mean:

  • $100,000 for injuries per person
  • $300,000 for accident injuries
  • $100,000 for property damage in an accident

The at least the amount of liability insurance you must have depends on the state, but these minimum limits are likely to be insufficient.

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Frequently asked questions about property liability insurance

Is property liability insurance necessary?

Property liability insurance is required by law in almost every state. Minimum required coverage varies by state.

Even if you’re required to have little coverage—or none in your state—it’s a good idea to have adequate liability insurance in case you cause an accident. If you cause an accident, you are still legally responsible for amounts that exceed your insurance limits.

How to apply for property liability insurance?

If another driver damaged your property, you can file a claim with the other person’s insurance company. Don’t forget to exchange information at the scene of the accident, including the person’s name, insurance card information and license plate number.

If possible, take photos at the crime scene. File an accident report with the police – the insurance company may request a copy.

Know what to do after a car accident to protect yourself from other drivers who may want to take advantage of the situation.

Is there a deductible for property damage claims?

No deductible applies to property damage liability insurance. A deductible is the amount of money you are personally responsible for paying in the event of a claim.


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