Chris Tepedino is a feature writer that has written extensively about car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, research investigative pieces…

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states…

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Reviewed byRachael Brennan
Licensed Insurance Agent for 14 Years

UPDATED: Aug 17, 2020

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The reason automobile liability coverage is mandatory in practically every state is to make sure all drivers on the road are protected. In all but 12 states, there is always an “at-fault” driver in an accident; and if everyone has liability coverage, then everyone is protected from the financial hardship of recovering after an accident — to an extent, that is.

But if the driver at fault (whether it’s you or the other motorist) doesn’t have enough liability coverage, then what? We’ll answer that question, and more, here in this article. If learning more makes you think twice about your coverage, you can get FREE liability insurance quotes right now.

What Is Bodily Injury Liability Coverage? And Why Do I Need It?

For starters, liability claims can only be made against a driver who was deemed at fault in an accident. So if you accidentally hit someone, and you are deemed legally responsible for the accident, whoever sustained damages from that accident could file a liability claim against you. The same goes vice versa; if someone hits you, and does physical damage to you or anyone else in the vehicle with you, they can have a bodily injury liability claim filed against them.

Liability claims, including bodily injury liability, are usually filed as third-party claims. This means that you are filing a claim to the insurance company which underwrites the policy of the person who was deemed at fault in the accident. As we’ve discussed before, third party claims are some of the hardest to file because it’s in the other insurance company’s best interest to make sure they pay you as little as possible — assuming they don’t flat-out deny your claim in the first place.

In order to have the best success when filing a bodily injury liability claim against the other driver’s insurance company, you will need to have plentiful and detailed documentation of any Hospital costs, medical or health care expenses related to the accident, and lost wages. It should be noted that legal fees incurred by the at-fault driver will be paid for under their policy’s bodily injury liability coverage. Any legal fees you incur as a result of getting the driver or their insurance company to pay should be covered under your policy.

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Bodily Injury Liability Has Its Limits — and You Need to Know What Those Are

As you may already know by now, your coverage limit is the maximum dollar amount your insurance company will pay out on a claim. You will be responsible for any amount of money which exceeds that number. So it’s good to have more liability coverage than not, just in case the worst happens. But, like everything else in insurance, the more coverage you buy, the more expensive your monthly premiums will be.

Monthly Premium Cost for Liability Coverage Legend: 25/50 Liability 50/100 Liability 100/300 Liability Texas Florida Pennsylvania Louisiana California 200 $99 $132 $152 $128 $171 $197 $67 $90 $104 $126 $168 $193 $176 $234 $269

So what’s the best strategy when it comes to purchasing liability coverage? Should the average driver purchase as much as they can? Or should you keep your limit slow to keep your premiums affordable? Well, that depends on the financial assets which your liability coverage will be protecting.

See, unlike other coverages on your policy, liability insurance has very little to do with protecting your car. What liability insurance protects you from is getting sued for every dime you’re worth in the event that you injure or kill someone with your vehicle, or damage someone else’s property. If the money you owe them exceeds the coverage limits of your policy, then they are legally entitled to come after you for the balance.

If you have an expensive house, a really nice car, lots of expensive electronics, fine jewelry, artwork, or any other valuable assets to protect, then you’ll want to buy as much liability coverage as you can afford. If you can’t afford to buy enough coverage to protect the total value of your liquid assets, you should still try and purchase as much liability coverage as humanly possible in order to avoid future complications if the worst happens.

Paying Out Bodily Injury Liability Claims

Another bit of information that can help you figure out where to set your liability coverage limits is knowing exactly how your insurance company will pay out a body injury liability claim if one is filed against you.

The first number declares how much money your insurance company will pay out to each injured person in the event that you caused an accident. The second number declares how much money your insurance company will pay out for the entire accident. in the chart below, we will explore a few scenarios which can help further explain exactly how your insurance company will pay out liability claims made against you:

ScenarioWhat $25,000 of Bodily Injury Coverage PaysWhat $50,000 of Bodily Injury Coverage PaysYour financial responsibility
You cause a wreck where two people in the other vehicle are hurt. The driver’s medical bills are $35k and the passenger’s are $14k.$25k of the driver’s $35kAll of the passenger’s $14kThe remaining $10k of the driver’s medical expenses
You cause a wreck where three people in the other vehicle are hurt. Person A’s medical bills are $2k, Person B’s medical bills are $4k, and person C’s medical bills + lost wages are $9k.All of the medical expenses of each injured personThe total cost of the accident is $15k, which is below your $50k limit as outlined by your policyNone, because you didn’t exceed the $25k per person or the $50k total coverage limit
You cause a wreck where three people are injured. Each person’s medical bills total $20k apiece.$20k to each injured party$50k of their $60k combined total medical expenses$10k, because you exceeded your $50k limit by $10,000

Of course, no matter what, you will have to purchase the bare minimum liability limits as outlined by your State’s laws. Conveniently, we have a breakdown of Auto insurance requirements by state. All you have to do is go to our front page and click on the state where you live. It’s as simple as that!

To compare liability insurance rates near you, enter your ZIP code into our FREE tool now.