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What is Property Damage Liability Insurance? What Does it Cover?

What is Property Damage Liability Insurance? What Does it Cover?

Property damage liability coverage is part of a car insurance policy. It helps pay to repair damage you cause to another person’s vehicle or property.

Property damage insurance liability coverage is required by law in most states. It typically helps cover the cost of repairs if you are at fault for a car accident that damages another vehicle or property such as a fence or building front.

Property damage liability coverage typically does not cover damage to your own vehicle. Collision coverage can help with repair costs for your car. Choosing a higher liability limit than the state minimum may be beneficial. If repair costs exceed your coverage, you will be responsible for the difference.

How much property damage liability are you required to have?

Every state requires a driver to carry a specified minimum limit of liability coverage. States generally require property damage liability coverage and bodily injury liability coverage.

According to Personal Auto Insurance Rates Overview, the mandatory coverage limits differ from state to state. For example, in California, drivers are required to have at least $5,000 of property damage liability coverage. In Texas, the minimum amount for property damage liability coverage is $25,000. In Nevada, it’s $10,000.

A limit is the maximum amount your policy will pay for a covered claim. You can choose your liability coverage limits when you buy car insurance or adjust them later with the help of your insurance provider.

Consider your property damage liability insurance limits

You can usually opt to purchase limits higher than the minimum set by your state. For example, if you chose a $10,000 coverage limit and the amount of damage you cause exceeds that, you may have to pay the difference out of pocket.

Having a higher limit of liability coverage may help you avoid having to pay out of pocket after an at-fault accident. The higher you set your coverage limits, the higher your insurance premiums will likely be.

What does it cover? 

  • Repairs to another person’s car, fence, mailbox, or other property
  • Road sign repairs
  • Legal expenses related to property damage

Property damage liability may cover others’ property damage, including vehicle repairs if you’re at fault in an accident. It may also cover related legal fees. Property damage liability differs from personal liability insurance, which many property insurance policies include.

PD liability is for damage you cause while driving, while personal liability is for damage and injuries you’re responsible for when not driving (see U.S. Commercial Auto Insurance Underwriting Profitability).

How does it work?

  • If you’re at fault for an accident, your PD coverage will help pay for the other person’s property repairs 
  • You choose your coverage limits, which is the maximum amount your insurer will pay 
  • If the damage costs more than your coverage limit, you may have to pay the difference 

What are the requirements? 

  • Each state has its own minimum requirements for PD coverage
  • Most states require at least $25,000 in coverage per accident

What’s the difference between PD and personal liability insurance? 

  • PD is part of your vehicle insurance policy
  • Personal liability insurance covers damage and injuries you’re responsible for when not driving

How much property damage car insurance do I need?

You’ll need at least the minimum amount of property damage liability auto coverage your state requires. Here are some examples of how much property damage car insurance you need in different states:

  • California car insurance: At least $5,000 of property damage liability
  • Florida car insurance: At least $10,000 of property damage liability
  • Texas car insurance: At least $25,000 of property damage liability

FAQ

What is property damage liability coverage?

Property damage liability coverage is a required part of a car insurance policy in most states. It helps pay for repairs if you damage another person’s vehicle or property, such as a fence, mailbox, or building, in an accident where you are at fault.

How much property damage liability coverage do I need?

Each state sets its own minimum coverage requirements. For example: California: $5,000, Florida: $10,000, Texas: $25,000. You can choose higher limits to avoid paying out of pocket if damage costs exceed your policy’s coverage.

Does property damage liability cover my own vehicle?

No, it only covers damage to another person’s property. If you want coverage for your own vehicle, you’ll need collision coverage, which helps pay for repairs regardless of fault.

What happens if the damage exceeds my coverage limit?

If repair costs exceed your policy’s limit, you’ll be responsible for paying the difference. Choosing a higher limit can reduce the risk of large out-of-pocket expenses after an accident.

How is property damage liability different from personal liability insurance?

Property damage liability (PD) is part of auto insurance and covers damage you cause while driving.
Personal liability insurance is typically part of a homeowners or renters policy and covers damage or injuries you are responsible for when not driving.