Liability Car Insurance In 2025: Ultimate Guide Made For You

Liability car insurance is the most basic and mandatory coverage that you need to drive in the U.S. or in many other countries around the world. It covers a wide range of physical and property damages caused to third parties involved in an accident caused by you.

Important Information: It does NOT cover damages to you or your car (that’s the serious implication of this insurance type).

The Two Main Coverages Included in Liability Car Insurance

Bodily Injury Liability (BI):

photo a woman being rescued used in liability car insurance article, image by Acton Crawford on Unsplash

Covers medical expenses, lost wages, legal costs, and pain and suffering of people you’ve injured in an accident.

May also cover:

Drivers and passengers of the vehicle you hit
Pedestrians
Your own passengers (in some cases)
Legal costs in case you’re sued by the injured party

Property Damage Liability (PD):

photo of a completely destroyed red car used in liability car insurance article, image by Tonia Kraakman on Unsplash

This one covers property damage caused to third parties, such as:

Vehicles
Buildings
Walls, fences, poles, etc.
Urban structures

Liability Car Insurance Has Some Limits You Have to Consider Before Buying It

Liability car insurance has payout limits. A common example of limit structure is:

$50,000 / $100,000 / $25,000

$50,000: Maximum paid per injured person
$100,000: Maximum paid per accident involving multiple injured people
$25,000: Maximum paid for property damage

Tip: You can choose higher limits for better protection.

Mandatory in the U.S.

If you live in the U.S., having liability car insurance is mandatory.

Each U.S. state has its own minimum coverage requirements (check the NAIC’s website). Here’s an example from California:

California:

$15,000 per injured person – Bodily Injury (BI)
$30,000 per accident – Bodily Injury (BI)

(That means if you injure two or more people in the same accident, the insurance will pay up to $30,000 total)

$5,000 for property damage – Property Damage (PD)

(That means the insurance will cover up to $5,000 for material damages caused to another person’s car, house, wall, pole, etc.)

Driving in California without liability car insurance is very risky and may result in:

Heavy fines
Driver’s license suspension
Vehicle impoundment

What’s Not Covered by Liability Car Insurance

Damages to your car
Your or your passengers’ medical expenses (except if covered by another policy)
Natural disasters
Theft
Vandalism
Accidents where you were not at fault
Costs that exceed the deductible or coverage limit (you’ll pay the difference out-of-pocket)

Why It’s So Important to Have Liability Car Insurance

Protects you financially from lawsuits
Prevents you from going bankrupt trying to pay all damages yourself
May cover millions in compensation depending on the accident severity! (That’s one of the most important reasons why)

Factors That Affect the Cost of Liability Car Insurance

Your state or geographic location
Your age
Your driving record
Your car’s model
Vehicle use (personal or commercial)
Your credit score (in some U.S. states)
Additional coverages you may have selected

Important Note: Liability car insurance is usually cheaper than full coverage (which is a bundle of multiple types of coverage), but it can become more expensive if you cause an accident and don’t have enough coverage.

Common Complementary Coverages

Although liability car insurance is the most basic and mandatory, insurers offer many other types of coverage:

Collision: Covers damage to your car from accidents
Comprehensive: Covers theft, vandalism, falling trees, and other non-collision events
Uninsured Motorist: Covers you when the at-fault driver has no insurance
Medical Payments (MedPay): Covers medical expenses for you and your passengers
Personal Injury Protection (PIP): Similar to MedPay, but includes additional benefits like lost wages

Legal Consequences for Not Having Liability Car Insurance in 2025

Fines ranging from $100 up to $5,000+
Driver’s license suspension
Inability to renew your car’s registration

News, Curiosities and General Info

Over 12% of drivers in the U.S. are uninsured (data from the Insurance Research Council)
The average personal injury claim is around $20,000
Property damage in modern vehicle collisions can exceed $10,000 to $15,000

Let’s Understand How It Works If It Happens to You

You cause a car accident
The insurer pays the victims’ damages (up to your policy limits)
If damages exceed those limits, you’ll have to pay the difference yourself
In lawsuit scenarios, the insurer may also cover legal costs

A Short Story That May Happen in Your Life

John was driving to work in Los Angeles when he got distracted by his phone and crashed into another car that was stopped at a red light.

The collision was strong enough to injure two people and damage two vehicles.

Result:

The victims’ medical expenses totaled over $60,000
The repair cost of the car was estimated at $18,000

John’s Insurer Paid Only:

$30,000 in total for the injuries
$5,000 in property damage

John had to pay around $43,000 out of his own pocket, plus he was sued by the victims.

Conclusion

Insurance may seem like an expensive burden — and some people might think, except for liability insurance (since it’s required), that it’s a luxury for the rich. But looking at the story above, we can understand the size of the problem we can face if we’re not prepared for unfortunate and unpredictable events in life.

Honestly, I don’t see it as a life priority like food, medicine, or electricity, but if you have an active driving routine and the financial conditions to afford even a small luxury, it’s something that you really should consider. Because no matter how positive we try to be, sometimes life just happens — and it’s better to be prepared for inconvenient situations.

If you’re thinking about getting one, check out these tips: https://consumer.ftc.gov/

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#CarInsurance #LiabilityInsurance #AutoInsuranceTips #InsuranceExplained

Liability Car Insurance In 2025: Everything You Need To Know Before Buying

Introduction: Liability Car Insurance