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When you hit the road, the last thing you expect is to have an accident. Not to mention the one you caused. But most states require car owners to carry a minimum level of car insurance so that drivers have a way to pay for the accidents they cause.
Here’s how to understand property damage liability insurance.
What is liability for property damage?
Property damage liability is a type of insurance that, along with personal injury liability, ensures that drivers can pay for losses when they are at fault in an accident. If you cause damage to the vehicle or to the property of others, that is when damage liability insurance comes into play.
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 carry auto insurance, like drivers who have already caused an accident).
- In Virginia, car owners can pay an uninsured motor vehicle charge of $500 if they don’t want to carry liability insurance.
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 others:
Another person’s vehicle. Whether you accidentally hit someone’s bumper when pulling out of a parking spot or cause a totaling accident with another driver’s vehicle, you are financially responsible for the damages. Property Damage Liability will pay for damage to the vehicle, including the cost of repairing or replacing someone else’s vehicle, up to the limit stated in your policy.
The property of others. Suppose you swerved to avoid an animal in the road and crashed into someone’s fence. Or you accidentally overwritten a neighbour’s mailbox. Property damage liability insurance also covers these types of damage.
Note that this type of insurance does not cover your own vehicle. Purchase comprehensive and collision coverage if you want insurance for damage or theft to your own vehicle.
How much does property damage liability insurance cost?
The average annual cost of auto liability 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 widely 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 auto insurance, including property damage liability, depends on many factors, including your location, age, gender, driving record, credit, and more.
You can find the cheapest auto insurance rates by getting quotes from several insurance companies.
What property damage liability insurance do I need?
It’s a good idea to carry enough liability insurance to cover what you might lose in a lawsuit. For example, car owners with 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, that $100,000 coverage can run out quickly. You are always responsible for the costs of damages that exceed your liability limits.
The liability limits of 100/300/100 mean:
- $100,000 for injuries per person
- $300,000 for injuries per accident
- $100,000 for property damage per accident
The minimum The amount of liability insurance you need depends on the state, but these minimum limits are probably insufficient.
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Property Damage Liability Insurance FAQs
Is damage liability insurance compulsory?
Property damage liability insurance is required by law in almost all states. The minimum amount of coverage required depends on the state.
Even if you’re only required to carry a small amount of coverage, if any in your state, it’s a good idea to have sufficient liability insurance in case you cause an accident. You are still legally responsible for amounts that exceed 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 exchange information about the scene of the accident, including the person’s name, insurance card information, and license plate number.
Take photos on site if possible. File an accident report with the police – the insurance company may request a copy.
Know what to do after a car accident to protect yourself from other drivers who might want to take advantage of the situation.
Is there an excess for liability claims for property damage?
There is no deductible for property damage liability insurance. A deductible is the amount of money that you are personally responsible for paying in the event of a claim.