Property Damage Liability Coverage, Explained

Property damage liability coverage pays for the repairs to other people’s property if its damaged in a car accident where you’re at fault.

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property damage liability

Property damage liability coverage can pay for the repairs to other people’s property—including car repairs, and other property—if they’re damaged in a covered car accident where you’re at fault.

What is property damage liability?

If you’re at fault in a covered car accident that causes damage to someone else’s property—like their car, fence, or custom Etsy mailbox—property damage liability pays to repair or replace their damaged property.

Your insurer could also be responsible for some of your legal fees if the other person takes you to court over the accident.

What does liability insurance cover?

Almost every state in the US requires car owners to have some liability insurance as part of their car insurance policy. This includes both bodily injury liability coverage and property damage liability coverage. Want to know the differences between the two? Jump ahead here.

In general, liability car insurance refers to the car insurance coverage that addresses what happens after a car accident when you’re at fault—or even partially at fault, in some states. It covers and protects other drivers and pedestrians, which is why most states have set minimum coverage limits. 

When you see the word “liability” in auto insurance, the coverage pays for someone else’s accident-related expenses, not your own. (But don’t forget that you’ll likely have policy limits applied—more on that in a sec.)

What does liability insurance not cover?

Liability coverage will not cover damage to your own car or property in the event of a car accident, nor will it cover your own medical expenses from a crash. Those are covered under different coverages, such as collision coverage and comprehensive coverage, and medical payments coverage or personal injury protection. You can find out more about the various types of required and optional car insurance coverages here.

What are some examples of losses that could be covered under property damage liability coverage?

Property damage liability could help you cover the costs of damage to another person’s property, per accident. This includes things like:

  • Damage to the other person’s car: auto repair labor and/or parts that need to be replaced.
  • Damage to other types of property: such as businesses, windows, trees, mailboxes, fences, etc.
  • Income that is lost during a business closure that was caused by a car accident where you’re at fault.
  • Legal and court fees incurred during the property damage claim.
  • Public property: such as light poles, or road signs.

What is the difference between property damage liability and bodily injury liability?

As mentioned above, there are two types of liability insurance, bodily injury liability coverage and property damage liability coverage. Together they make up liability insurance, which is required by nearly every state for all car owners.

Even though they fall under the same “liability” umbrella, bodily injury liability and property damage liability serve different purposes. Bodily injury liability coverage covers injury to another person who has been hurt during a car accident or collision that you have accidentally caused. Property damage liability coverage covers damage or destruction of property belonging to another person that has been harmed during a car accident or collision that you have accidentally caused.

Another distinction is that states often require different amounts of coverage between the two types of liability insurance. For instance, in Texas you are required to have a minimum of $30,000/$60,000 of bodily injury liability coverage (more on how liability limits work below), while you are required to carry a minimum of $25,000 in property damage liability coverage.

How do liability limits work?

Coverage limits set the maximum amount that your insurer will pay out in the case of a covered accident. For a coverage that has what’s known as a split limit—like with bodily injury liability—you’ll see them listed in a row like this: $100,000/$250,000.

  • The first limit is a per person injury limit, and is the maximum amount that will be paid to any one injured person in the accident.
  • The second limit is a per accident injury limit, and is the maximum amount that will be paid to all injured people in the accident.

Some insurance companies will include a third limit in their split limit: that’s a per accident limit for property damage claims. This is the maximum amount that the insurer will pay for damage to other cars or property resulting from the accident. So you might see $50,000/$100,000/$250,000. (FYI, if you have a Lemonade Car policy, we list property damage liability and bodily injury liability separately.)

You may be able to select either a single limit instead. A single limit combines bodily injury liability and property damage liability insurance into one liability limit. If the total costs of the accident—meaning both medical bills, injury-related expenses, and property damage combined—exceed this liability limit, you bear financial responsibility for the remaining expenses.

How much liability coverage do you need?

When you get an insurance quote and pick the amount of coverage you need, your insurance company will probably have a default suggestion to help you end up with the right amount.

Most states have passed insurance requirements with minimum limits for liability coverage. Minimum limits range from $10,000 to $50,000. But you’ll want to select enough coverage—perhaps more than the bare minimum required—so that you’ll feel fully protected in case of a crash. 

Feeling lucky? In some states, like Arizona, you can provide proof of financial responsibility to the DMV in the form of a bond, cash, or certificate of deposit, and they will waive your state minimum car insurance requirements. But in the event of a pricey accident, you—and your wallet—might end up regretting that decision. 

How much does property damage liability coverage cost?

The cost of this type of coverage depends on the property damage liability limits you pick, the type of car you drive, and other factors—like your driving record. When getting an insurance quote, ask your insurance company to show you several options and how they impact your policy price. 

Can I change my coverages and limits?

Yes. When you drive with the Lemonade app—and enable location services and permissions—you have the power to update your coverages and coverage limits at any time. 

First, enter your policy from the Car tab on the app. Select the icon that has three dots in the top right-hand corner, then choose the ‘Update Coverages’ option. 

Property Damage Liability insurance, Explained

From there, you can add and remove coverages, and increase and decrease your coverage limits, as effortlessly as when you signed up for your policy. Keep in mind: You won’t be able to remove coverages that are required in your state.

Updating coverage mid-term will likely impact your policy price, but you’ll see an estimated price change as you make changes in the Lemonade app. It’s up to you to decide what’s within your budget, and what level of protection you want—which is why Lemonade Car is great for anyone who really wants to customize a policy to their own needs.

Property Damage Liability Coverage, Explained
Price changes are hypothetical

A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them. Coverage may not be available in all states.


Please note: Lemonade articles and other editorial content are meant for educational purposes only, and should not be relied upon instead of professional legal, insurance or financial advice. The content of these educational articles does not alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. While we regularly review previously published content to ensure it is accurate and up-to-date, there may be instances in which legal conditions or policy details have changed since publication. Any hypothetical examples used in Lemonade editorial content are purely expositional. Hypothetical examples do not alter or bind Lemonade to any application of your insurance policy to the particular facts and circumstances of any actual claim.