In this guide
The right amount of liability car insurance is at least your state's legal minimum, and often more, because a serious crash can cost far more than minimum limits pay. There is no single correct number. The amount that makes sense depends on your assets, income, and risk tolerance, and a licensed agent can help you weigh it. Understanding how limits work is the first step.
Key takeaways
- Liability limits are written as three numbers, such as 25/50/25: per-person injury, per-accident injury, and property damage.
- State minimums vary widely and may not cover a serious accident, so you could be responsible for the rest.
- Higher limits cost more, but the cost of an added layer is often modest compared with the protection it provides.
- Assets, income, and what could be garnished or sued for are the main things to weigh.
- An umbrella policy is another way to add protection above your auto limits.
What liability coverage pays for
Liability coverage pays for injuries and damage you cause to others in a crash where you are at fault. The NAIC and the Insurance Information Institute (Triple-I) describe two parts:
- Bodily injury liability covers injuries you cause to other people, such as medical bills and lost income, and legal costs if you are sued.
- Property damage liability covers damage you cause to other people's property, such as their vehicle, a fence, or a building.
It does not pay for your own injuries or your own car. Those fall under other coverages, such as collision, medical payments, or personal injury protection. See car insurance coverage types explained.
How to read a limit like 25/50/25
Liability limits usually appear as three numbers, in thousands of dollars:
| Number | What it is | In 25/50/25 |
|---|---|---|
| First | Bodily injury, per person | $25,000 |
| Second | Bodily injury, per accident (all injured people combined) | $50,000 |
| Third | Property damage, per accident | $25,000 |
If you injure one person and their bills reach $40,000, the policy pays $25,000 and the rest is potentially your responsibility. If three people are hurt, the policy would pay no more than $50,000 total, no matter how much their combined costs are.
Some policies use a combined single limit instead, one number that covers all liability damages from an accident. Ask your insurer which format your policy uses.
What states require
Virtually every state requires liability coverage, but minimum limits differ. Triple-I's chart (as of 2022) shows examples: 15/30/5 in California, New Jersey, and Pennsylvania; 25/50/25 in states such as Alabama, Georgia, and Indiana; 50/100/25 in Alaska and Maine; and 30/60/25 in Texas. Florida's required liability is property damage only, with PIP as the other required coverage. Minimums change over time, so confirm the current numbers with your state insurance department. See minimum car insurance requirements by state.
Watch out: The Texas Department of Insurance notes that its minimum limits may be too low for accidents involving several vehicles or a totaled car. That is true in many states.
Why minimums can fall short
Consider the pieces that can add up after a crash:
- Medical costs. Emergency care, surgery, hospital stays, and rehabilitation can reach high amounts quickly.
- Lost income. An injured person may be unable to work for months.
- Vehicle costs. New vehicles can cost far more than a minimum property damage limit, especially if more than one car is involved.
- Legal costs. If you are sued, your insurer generally provides a defense, but a judgment above your limits can be your responsibility.
When damages exceed your limits, the injured party may seek the difference from you personally. Depending on your state, that could involve your savings, wages, or other assets. Rules about what can be collected vary by state, so ask a legal or insurance professional about your situation.
Factors to weigh when choosing limits
CoverMoose does not give personal advice, but these are the questions people commonly consider:
- What do you own? Home equity, savings, investments, and other assets could be at risk in a lawsuit.
- What do you earn? Future wages can sometimes be garnished after a judgment, depending on state law.
- How much do you drive? More time on the road, heavy traffic, or driving with passengers can increase exposure.
- Who else drives your car? Teen or inexperienced drivers on your policy raise the stakes.
- Do you drive for work or rideshare? Business use can change requirements. See rideshare insurance for Uber and Lyft drivers.
- What can you afford in premiums? Compare the cost of higher limits to the protection.
Triple-I suggests buying more than your state's minimum to protect your assets. Prices for higher limits vary by insurer, so ask for quotes at several limit levels and see the difference for yourself.
Comparing options side by side
A practical approach is to ask for quotes at two or three levels and see the price difference:
| Option | Typical purpose | Consider if |
|---|---|---|
| State minimum | Meets the legal requirement only | You have very limited assets and understand the risk |
| Moderately higher limits | Adds a larger buffer for serious injuries | You have some savings or a steady income to protect |
| High limits plus umbrella | Adds protection beyond auto limits | You have significant assets or higher lawsuit exposure |
This table is illustrative, not a recommendation. Insurers can set their own minimum requirements for higher tiers and for umbrella eligibility.
Umbrella insurance
A personal umbrella policy adds liability protection on top of your auto and home policies. Insurers usually require you to carry certain underlying limits on those policies first. Learn more in personal umbrella insurance explained. If you already own a home or have substantial savings, it can be worth asking about.
Related coverages that protect you, not others
Higher liability limits protect your assets from claims by other people. Your own injuries, and damage to your car, are covered by other parts of the policy. If the other driver has no insurance or too little, uninsured and underinsured motorist coverage could pay your costs. Collision covers your car when you are at fault. Think of the policy as a set of layers rather than a single decision.
How to change your limits
- Find your current limits on your declarations page.
- Ask your insurer for the price of the next one or two limit levels.
- Compare quotes from several insurers using identical limits and deductibles.
- Check any lender or lease requirements, which can set minimum limits.
- Choose the amount and confirm the change in writing, with an updated ID card.
Review limits whenever your life changes, such as buying a home, getting a raise, or adding a teen driver.
Frequently asked questions
What does 100/300/100 mean?
It means $100,000 bodily injury per person, $300,000 per accident, and $100,000 property damage. It is a common example of higher-than-minimum limits, though it is not a recommendation for any individual.
Is the state minimum enough?
It satisfies the law, but it may not cover a serious accident. The Texas Department of Insurance cautions that its minimum may be too low for some accidents, and Triple-I suggests buying more than the minimum to protect assets.
What happens if damages exceed my limits?
The injured party can potentially seek the remainder from you. What can be collected varies by state, so ask a legal or insurance professional.
Does liability cover my own passengers?
Liability can cover injuries to people in your car who are not you, but some policies exclude family members, and state rules differ. Check your policy and consider medical payments or PIP.
Can my lender require higher limits?
Yes. Lenders and lessors often set minimum liability limits as well as collision and comprehensive. Check your contract.
Sources
- Insurance Information Institute – Background on: Compulsory auto/uninsured motorists
- Texas Department of Insurance – Auto insurance guide
- NAIC – What Does Auto Insurance Cover?
- Insurance Information Institute – Auto insurance basics: understanding your coverage
General information only. This guide explains general concepts and is not insurance, legal or financial advice. Rules and prices vary by state and insurer. Check your policy documents and speak to a licensed insurance professional or your state insurance department about your situation.