Liability Coverage In Car Insurance

Car insurance liability coverage limits are generally written and explained like this:

There are other forms of liability coverage in the world — most protect professionals in their line of work — but another form of liability coverage to consider, particularly if you have significant assets to protect, is umbrella insurance.

Do I need liability coverage?

Liability coverage is the portion of your car insurance that is generally required by each state (the exceptions being New Hampshire and Virginia where car insurance is optional if you can prove sufficient financial responsibility). 

How much liability coverage do I need?

From a legal perspective, you are only required to carry your state’s minimum coverage for your auto insurance. While state legislatures set minimum car insurance requirements to suit the needs of your state’s entire driving population, you need to be concerned with your own needs. 

The government needs to balance everyone’s income and everyone’s assets to find reasonable requirements that work broadly, but you want as much coverage as you need, not as much as they tell you to have.

Minimum liability requirements

In many states the minimum liability requirements are significantly lower than the cost of a crash. Arguably the minimum requirement isn’t high enough in any state. In a crash with injuries, medical bills can pile up far past that minimum personal injury limit. Similarly, a crash with an expensive car (like a Tesla) could be super expensive to repair or replace.

Here are some examples of how the requirement can vary by state:

• In California, drivers are only required to have 15/30/5 coverage.
• In Texas, drivers are required to have at least 30/60/25 coverage.
• In New York and Washington state, drivers must have at least 25/50/10 coverage. New York also requires Personal Injury Protection (PIP) and Uninsured Motorist Coverage (UI/UIM).

If you have assets to protect

If your net worth exceeds the limit your insurance covers, you could be personally liable for the injuries and damage sustained in a crash.

It is a good idea to have as much extra liability coverage as you can afford. One bad crash can bankrupt you. The good news is that significantly more liability coverage doesn’t lead to significantly higher car insurance premiums. See how prices change with increased coverage in the chart below.

If you have significant assets to protect

If your net worth exceeds $1M it’s time to consider umbrella insurance, too. Umbrella insurance is a liability insurance policy that is separate from your other insurances. Umbrella insurance kicks in when your car insurance and homeowners insurance policy limits have been exhausted. While it is technically separate from these other insurances, your umbrella policy will have liability coverage limits you must meet for both.

How increased liability coverage affects your premium

If you consult an insurance broker, you might find they recommend limits of 100/300/100. This is a safe choice for them to recommend because it’s unusual that accidents cause more than this much damage. 

That amount of liability coverage may be good for you, but it’s very possible there’s a better selection for your specific needs based on your income, your net worth, and your personal risk tolerance.

Since pricing information and transparency is hard to come by in the insurance world, we took a look at our massive database of real insurance quotes to find out how much extra liability coverage actually costs, so you can make a more informed decision.

You might be surprised at how affordable extra coverage is. Sometimes it’s even cheaper than less coverage! As Coverage Cat founder Max Cho likes to say, “insurance prices are weird.”

* These numbers seem out of place, and they’re out of sync with the rest of the data because each insurer has their own ways of doing quotes. It is likely because some (low-priced) insurers don’t offer policies at these coverage limits, or do so in a more restricted manner. By excluding them from the data, the average price for this level of coverage goes higher. Offering only a subset of liability coverage limits is yet another aspect of how we lack transparency when shopping for car insurance. 

** In California where the uninsured motorist rate is very high, our quotes include UI/UIM even though it is not required by law. The average cost of the state minimum insurance with and without UI/UIM differed by only $1 per month.

The state minimum column is just that — policies that match the required minimum, which varies by state. We’ve only included these five states because these are the states where we can currently help people save money on insurance.

Where our data comes from

Coverage Cat has a unique database of hundreds of thousands of real auto insurance quotes derived from public data. We use this dataset and others to match Coverage Cat users with the best insurance for their needs.

All of our quote data assumes the driver is: single, college educated, has a clean driving record, and has been driving since 16 years old. Age, gender, location, and miles driven per day are variable. Our prices do not consider any discounts which might apply to you such as those for being a veteran, having multiple policies, loyalty, etc.