What Is Property Damage Liability Insurance? (2025 Guide)

What Does Property Damage Liability Cover (and Not Cover)?

Property damage liability insurance covers the cost of repairing or replacing property damaged in an accident that was your fault. This often involves paying for the cost to repair another driver’s car. It could also cover damage to property, such as a damaged fence or building exterior. In some policies, you’ll have coverage for legal fees related to the accident.

This type of insurance usually does not cover the cost of repairs for your own vehicle. You may need collision insurance or similar coverage to pick up the tab for your damages.

How Does Property Damage Liability Work?

Knowing when your insurance kicks in, and how it works, can help you appreciate its importance. Here’s a look at how this type of insurance functions:

• You’re involved in a car accident. If you were at fault, then your insurance will step in to assess liability claims.
• The damaged property owner files a claim. This is often the other driver. They file a claim against your insurance policy. The insurance company assesses the damage and estimates repair costs.
• The claim is settled. If the insurance company approves the claim, then they pay on your behalf up to the policy limits. If damage exceeds your policy limit, you may be responsible for paying the difference out of pocket.

It’s important to carry adequate property damage liability insurance because the cost of property damage can add up quickly. This is especially true if the car you strike is expensive to repair or there are multiple vehicles involved in the accident.

If there is a dispute over who caused the accident, then it may be worthwhile to get a car accident lawyer to help you resolve things. ConsumerShield helps connect people with qualified local lawyers. Fill out our contact form to get help today.

How Much Property Damage Car Insurance Do I Need?

When deciding how much insurance to carry, it’s tempting to go with the cheapest option. But this can leave you with out of pocket expenses if the damage exceeds your policy limit. Let’s take a look at the factors you should consider when deciding how much coverage you need.

State law requirements

Most states require you to carry some level of property damage liability insurance. The minimum required amount varies by state. For example, California requires drivers to carry coverage for at least $5,000 per accident in property damage. Meanwhile, South Carolina requires drivers to carry no less than $25,000 per accident for property damage.

These requirements are in addition to minimum requirements for bodily injury damage insurance. Those minimums also vary by state.

It is important to remember that having the minimum required insurance does not necessarily mean you are adequately protected. If you cause an accident where the damage exceeds your policy limit, you can be held personally responsible for paying the difference. For this reason, you may want to purchase more coverage than the minimum requirement.

Personal Finances and Assets

Consider your financial situation when deciding how much property damage liability insurance to carry. If you have valuable assets, such as owning your home or other investments, these could be targeted in a lawsuit. Ideally, you should have coverage that is greater than your overall net worth.

Carrying higher coverage limits helps protect your assets because payout for damage is covered entirely by insurance. Otherwise, a car accident that is your fault could be financially devastating. Your home and other assets can be targeted to cover the damages that exceed your policy limits.

Risk Tolerance

Your personal approach to risk also plays a role in determining your coverage needs. If you’re a cautious driver with an accident-free history, then you might feel comfortable with lower coverage. If you live in an area where car accidents are common, then you might instead opt for higher coverage.

Keep in mind that car accidents can be unpredictable. There are over 15,000 car accidents per day in the U.S. It only takes one day’s bad luck to leave you on the hook for significant property damage costs.