Glossary

Liability coverage

The part of a car insurance policy that pays for injuries and property damage you cause to others, plus your legal defense, up to your limits.

Also called: liability insurance, auto liability, third-party liability

Liability coverage is the core of every auto policy and the part nearly every state requires. It pays other people when you are legally responsible for a crash: their medical bills, lost income, pain and suffering, and damage to their car or other property. It also pays for a lawyer to defend you and for court costs if you are sued, generally on top of the limits.

It has two parts. bodily injury liability pays for injuries and deaths you cause, and property damage liability pays for damage to vehicles, buildings, fences and other property. The coverage generally applies to you and to anyone you allow to drive your car, and it usually covers you when you drive a car you do not own, within the policy's terms. It does not pay for your own injuries or your own car.

Each state sets minimum limits, but minimums are low compared with today's car prices and medical costs. If a judgment exceeds your limits, your savings, home equity and future wages can be at risk. Many drivers choose limits such as 100/300/100 or higher, and people with significant assets often add an umbrella policy. See liability limits, and use the How much car insurance do I need? to estimate how much protection fits your situation.

Last reviewed October 4, 2026

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Related terms

Bodily injury liability The part of auto liability insurance that pays for injuries or deaths you cause to other people in a crash, plus your legal defense. Property damage liability The part of liability coverage that pays for damage you cause to other people's cars and property, such as fences, buildings and poles. Liability limits The most a liability policy will pay for injuries and property damage you cause, usually written as three numbers such as 100/300/100. Minimum coverage The least car insurance a state lets you carry to drive legally, usually liability coverage at set limits and sometimes PIP or uninsured motorist coverage. Umbrella policy Extra liability insurance, usually sold in amounts of $1 million or more, that pays after your auto or home liability limits run out. Combined single limit One liability limit covering all bodily injury and property damage from a crash, instead of separate per-person, per-accident and property caps.

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Related insurers

Seguros Múltiples Puerto Rico insurance cooperative owned by about 150 local cooperatives, in business since 1965 and selling auto, home and business coverage island-wide. Hugo A West Hollywood online agency selling six-month liability-only car insurance paid by the day, week or month, with no down payment, in 19 states. Fred Loya Insurance El Paso-based seller of low-cost, often minimum-limit auto policies through 800-plus storefront offices in about a dozen Sun Belt and Midwest states. Universal Insurance (Puerto Rico) Guaynabo-based insurer of Universal Group that calls itself Puerto Rico's largest auto insurer, selling annual, double-interest and liability auto policies.

Related tools

How much car insurance do I need? A starting point for your limits and options, from liability to gap and rental, built from common rules of thumb and your state's minimums.