Property Damage Liability

In car insurance, property damage liability helps pay the repair cost of damage you cause to others’ property, such as houses, vehicles, etc. Without property damage liability, you may have to pay for these costs from your pocket, which may be costly.

Property damage liability is an important part of your insurance coverage. It is part of the minimum liability coverage that many states require drivers to carry.

In this article, you will find an in-depth analysis of property damage liability, including what it covers, how it works, and if you must have it.

Let’s get started!

What Is Property Damage Liability?

By definition, property damage insurance covers the cost of property repair or replacement when you are at fault in an accident which causes damage to someone else’s property. Your insurance will list the type of property covered under your policy.

Generally, property damage liability does not cover damage to your own property. Coverage for your own property, car, etc., falls under collision and comprehensive insurance, which you pay for separately.

The purpose of property damage coverage is to protect you from any financial liability when you are at fault and protect your finances from expensive repair costs and even lawsuits.

Do I Need Property Damage Liability?

Yes, you need property coverage liability to protect you from financial liability and as a requirement by law.

All states require drivers to carry minimum liability insurance. This is to help cover injuries and damage you cause to others drivers, other road users or property.

Typically, a minimum liability policy carries two types of coverage:

  • Property damage liability insurance to help pay for repairs if you are at fault
  • Bodily injury liability coverage to help cover medical costs if you’re at fault and hurt someone

For instance, if you are in Arizona, the state requires you to have minimum liability insurance. Often, this includes both bodily injury and property damage liability coverage.

What Does Property Damage Liability Cover?

Basically, property damage liability covers the damage you cause to another person’s property when you are at fault. However, in many cases, it operates on a per accident basis, and the insurance company lists the types of property covered under your policy.

Here are some of the coverages under property damage liability:

  • Repair costs for the damage you cause to another vehicle, including labor, body parts replacement, etc
  • Contents of the other vehicle: If the accident you cause leads to damaged property inside the other person’s vehicle, such as a car seat, you’re liable, and your property damage coverage can pay for such damages
  • Fixing up or repairing damage or destruction to other property such as businesses, houses, signs, fences, lampposts, trees, mailboxes, etc
  • Lawsuit charges, including attorney, court, and other legal defense fees, are the charges that the victim incurs during the property damage claim. This depends on the terms of your policy
  • Lost income, especially from a business closure, which your at-fault accident caused

If you want to claim for the damage to your own car or your medical expenses, you will use the collision and comprehensive coverage – if you have one.

How Does Property Damage Liability Work?

In an accident, there are two scenarios:

  • You are at fault for the accident, which means you caused the accident
  • You are a victim of the accident, which means you got an injury if your property was damaged

When you’re deemed at fault in an accident, it is expected that you’ll assume some form of financial responsibility to cater for any property you’ve damaged. Property damage liability insurance will help you cover this financial responsibility.

Note that property damage liability will only pay the cost of liability up to your policy’s limit.

Insurers usually specify limits for your policies written as a series of three numbers separated by slashes.

For instance, you may see a figure written this way 100/500/50 in your policy. This abbreviation expresses coverage limits, which means that $100,000 limit for bodily injury liability per person, $500,000 limit for bodily injury liability per accident, and $50,000 limit for property damage liability.

If you pay for higher limits you will benefit from more coverage limits.

How Much Property Damage Liability Coverage Is Required?

The amount required for property damage liability coverage depends on different factors, including your state. This is because insurers set the cost of liability insurance based on the minimum property damage liability the state requires.

Different states have set different minimum costs for property liability, and this is different for every state. For example, the minimum property damage in Arizona is $10,000, while in California, drivers are required to carry at least $5,000 in property damage liability insurance, and Texas sets the minimum at $25,000.

You also need to keep in mind that your state may require you to carry other types of coverage on your car insurance policy, such as medical payments.

How Much Property Damage Liability Should I Buy?

How much property damage liability you need depends on different factors, such as:

  • Your state
  • How much property damage costs
  • The insurance company
  • Cost of insurance or other coverages on your policy
  • Location

You can purchase a minimum amount of property damage liability coverage, which is legally required by your state. But you can also consider purchasing higher limits than the state minimum requirement. Why?

If you’re at fault in an accident and the cost of damages is greater than your policy limit, you may need to pay the difference out of pocket. This could cause you significant financial burden and stress, which is what insurance should protect you from in the first place.

When buying property damage liability coverage, you should also consider the cost of other insurance coverages in your policy that increase your protection such as:

  • Uninsured Motorist property damage coverage
  • Personal injury protection
  • Insured motorist bodily injury coverage

Additionally, you should know that you may have higher premiums on liability insurance if you live in a location with more drivers. This is because you have a higher chance of being involved in an accident.


Purchasing a higher coverage limit than your state’s minimum requirement will also likely increase your premium rate. But, would you opt to pay for damages out of pocket or pay higher premiums? This will tell you how much property damage insurance you should buy.

How Do I File A Property Damage Liability Claim?

You will not be the one filing a property damage liability claim to your insurance company. The party complaining of property damage is responsible for filing the claim through your insurer.

Property damage claims are filed as third-party insurance claims. Your insurer will work with the owner of the damaged property to pay for the repair or replacement costs up to your policy limits. If your limit is not enough, the third party can sue you or require you to pay for the remaining cost out of your pocket.

If you’re at-fault for causing damages to your vehicle as well, you could file a claim to your insurer through your collision or comprehensive insurance policy to fix the damages.

Final Word

Property liability insurance protects you from financial liability to the property you’ve damaged if you are at fault in an accident. It is a minimum insurance requirement for most states and a must-have policy if you’re a driver. It’s not enough to have damage liability alone. You can increase your protection by adding other insurance coverages to your policy.