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When you hit the road, the last thing you want to happen is to have an accident. Let alone one you caused. But most states require car owners to carry a minimum level of car insurance so drivers have a way to pay for accidents they cause.

Here’s how to understand property damage liability insurance.

What is property damage liability?

Property damage liability is a type of insurance that, along with bodily injury liability, ensures that drivers can pay for losses when they are at fault for an accident. If you cause damage to another person’s vehicle or property, then property damage liability insurance kicks in.

Property damage liability insurance is required by law in almost all states, with two exceptions:

  • In New Hampshire, there is no state-mandated insurance law (although some New Hampshire drivers must purchase auto insurance, such as drivers who have previously caused an accident).
  • In Virginia, car owners can pay a $500 uninsured motorist fee if they don’t want to buy liability coverage.

Even if your state doesn’t require auto insurance, it’s a smart move to have it.

What does property damage liability insurance cover?

Property damage liability insurance covers two main types of damage you cause to other people:

Another person’s vehicle. Whether you accidentally hit someone’s bumper while backing out of a parking spot or cause an accident that rear-ends another driver’s vehicle, you are financially responsible for the damages. Property damage liability will pay for that damage to the vehicle, including the cost of repairing or replacing someone else’s vehicle, up to the limit listed on your policy.

Another person’s property. Say I swerved to avoid an animal on the road and crashed into someone’s fence. Or you accidentally grabbed a neighbor’s mailbox. Property damage liability insurance also covers these types of damages.

Note that this type of insurance does not cover your vehicle. Buy comprehensive and collision coverage if you want to insure your vehicle is damaged or stolen.

How much does property damage liability insurance cost?

The average annual cost for liability car insurance (property damage liability and bodily injury liability) is $650.35, according to the most recent data from the National Association of Insurance Commissioners.

Average liability insurance costs vary slightly by state: The cheapest liability insurance cost is in North Dakota ($312.30 per year) and the most expensive is in Louisiana ($1,023.91 per year).

The cost of car insurance, including property damage liability, is based on many factors, including your location, age, gender, driving record, credit and more.

You can shop around for the cheapest car insurance rates by getting quotes from several insurance companies.

How much property damage liability coverage do I need?

It’s smart to buy enough liability insurance to cover what you might lose in a lawsuit. For example, car owners with a high net worth should have a high level of liability insurance, including property damage liability.

Consider at least $100,000 in property damage liability. If you cause an accident that damages multiple cars, for example, $100,000 of coverage can be used up quickly. You’re still on the hook for damage costs that are above your liability limits.

Limits of liability of 100/300/100 means:

  • $100,000 per person for injuries
  • $300,000 for accident injuries
  • $100,000 in property damage per accident

of minimum the amount of liability insurance you are required to carry depends on the state, but these minimum limits are likely to be insufficient.

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Frequently asked questions about property damage liability insurance

Is liability insurance required for property damage?

Property damage liability insurance is required by law in almost every state. The minimum amount of coverage required varies by state.

Even if you’re only required to carry a small amount of coverage—or none at all in your state—it’s a good idea to have enough liability insurance just in case you cause an accident. You are still legally responsible for amounts that are above your insurance limits if you cause an accident.

How do I file a property damage liability insurance claim?

If your property was damaged by another driver, you can file a claim with the other person’s insurance company. Be sure to share information at the scene of the accident, including the person’s name, insurance card information, and license plate number.

Take pictures at the scene if possible. File an accident report with the police – the insurance company may ask for a copy.

Know what to do after a car accident to protect yourself from other drivers who may want to take advantage of the situation.

Is there a deductible for property damage liability claims?

There is no deductible for property damage liability insurance. A deductible is the amount of money you are personally responsible for paying when there is a claim.

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