Property damage liability insurance pays for car accident-related damage you cause to other people’s property. Since it’s a required coverage in most states, you likely already have it if you have an auto insurance policy.
It’s important to understand property damage liability insurance so you can decide if you have enough coverage in case you cause a crash.
Learn more: How does car insurance work? The basics explained.
If you harm or break someone else’s property due to a car accident, property damage (PD) liability pays for the repairs or replacement of their property up to your coverage limit. This insurance only addresses damage to property owned by someone else — not your vehicle or anything else you own.
The types of property covered can include:
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Vehicles
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Personal belongings inside a car
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Buildings
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Public property
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Landscaping and trees
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Fencing
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Guardrails
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Business property, including lost income if the business must close for repairs
Your property damage liability insurance can also pay for your legal costs if you are sued after causing an accident.
Learn more: How much does car insurance increase after an accident?
If you accidentally drive your car into your neighbor’s parked car and mailbox, both cars and the mailbox need repair. Your property damage liability insurance funds the repairs for your neighbor’s car and mailbox only.
When you are at fault, property damage liability pays to repair someone else’s vehicle or property. Collision insurance pays for repairs to your vehicle after an accident, regardless of fault. Expenses typically covered by collision insurance include:
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Repairs to your car after a hit-and-run
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Repairs to your car after an accident you caused
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In some states, repairs to your car after being hit by an uninsured driver
Collision insurance has a deductible, while property damage liability does not.
Collision insurance does not cover costs resulting from vehicle theft, weather damage, and vandalism. These claims would fall under comprehensive insurance.
Property damage liability will not pay for repairs to your vehicle or damage to others beyond your coverage limit. It also doesn’t cover any medical expenses for you or anyone else. And your property damage liability insurance won’t pay claims resulting from an intentional act by you. Only accidents are covered.
Your auto insurance policy defines the maximum limits your insurance company will pay for all your coverage types.
The coverage limits for bodily injury and property damage are stated together as a series of three numbers, such as 25/50/20, which means:
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$25,000 for injuries for one person in an accident
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$50,000 for injuries in an accident
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$20,000 for property damage in an accident
Learn more: What to do after a car accident: Your step-by-step guide
For example, if you have a $20,000 limit for property damage and cause three separate accidents in a year, your insurance would pay up to $20,000 for property damage for each, for a total of up to $60,000.
After an accident, you share your contact and insurance information with the other driver or a property owner. That individual can file a claim against your liability car insurance and work with an insurance adjuster to get the car or property fixed.
If the cost of damage exceeds your policy limit, you are still legally liable for the remainder. If the estimated repair costs are $25,000, but your limit is $20,000, you will owe the $5,000 difference, and the property owner can sue you to get it.
Property damage is required in all states except New Hampshire. And even though New Hampshire does not require liability insurance, you must show proof of financial responsibility after an accident. That proof can be an insurance policy or a deposit with the state treasurer.
Every state defines minimum required auto insurance limits. But many drivers need higher limits than their state requires. This is because you are legally responsible for the damage you cause, no matter how much it costs to repair. If you have low insurance limits, you could owe a significant amount of money if you cause an accident.
For example, you could drive through someone’s front door by accident and receive a $50,000 repair bill from the homeowner. A 25/50/10 liability policy would only pay $10,000 for property damage. The courts can take the remaining $40,000 from your bank accounts and other assets or possibly garnish your wages.
Property-damage bills can add up fast. For example, if you crash into a new Lexus and total it, the bill could easily be over $50,000.
To decide how much property damage liability coverage you need, consider your net worth and how much you could lose in an expensive lawsuit. Generally, your property damage insurance limit should be high enough to protect that value.
Learn more: How much car insurance do I need?
You can make a property damage liability claim against someone else if they cause an accident that damages something you own. This could be your vehicle, house, fence, trees, mailbox, or something else.
Follow these steps to file a claim:
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At the accident scene, collect the other driver’s car insurance and contact information.
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Take photos of the scene, the damage, and the surrounding area.
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Talk to witnesses and get their contact information.
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Ask workers in nearby storefronts if they have security footage of the scene and get their contact information. Video will be helpful, especially if it’s not clear who was at fault.
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Call your insurance company to report the damage, even if you plan to make a claim against someone else. Your insurer may help you make the claim against the other person’s insurance company.
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If you want to pursue the claim yourself, call the other insurance company immediately to open a claim and share the information you’ve collected.
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Ask for a claim number and contact information. Follow up as needed until your vehicle is repaired.
Learn more: How to file a car insurance claim
Umbrella insurance offers additional liability coverage that adds to the limits on your auto and homeowners policies. To buy umbrella insurance, you’ll typically need a certain high level of liability insurance already on your auto and home policies, such as 300/500/100 for auto. From there, you can add $1 million or more with an umbrella policy.
If you are sued and the costs of legal representation and damages exceed your auto or home policy limits, the umbrella policy kicks in for additional costs up to the limit of the umbrella policy.
Learn more: Homeowners insurance: What it covers and how much you’ll pay
Depending on where you live, you may be required to have certain other coverage or have the option to buy additional protection.
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Bodily injury liability. Bodily injury liability pays medical expenses for other drivers and their passengers when you are at fault.
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Collision and comprehensive. Collision and comprehensive insurance pay to repair or replace your vehicle in many scenarios, from crashes to car fires to flood damage.
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Uninsured motorist coverage. Uninsured motorist (UM) coverage pays your medical expenses and related costs if you are hit by an uninsured driver. In some states, you can buy UM coverage that also pays for property damage.
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Personal injury protection (PIP). PIP covers a range of injury-related expenses for you and your passengers after an accident, regardless of fault.
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Medical payments coverage (MedPay). MedPay covers medical bills for you and your passengers after an accident, no matter who is at fault. MedPay and PIP are similar, but PIP pays for a broader range of expenses.
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Rental reimbursement insurance. Rental reimbursement helps pay for the costs of a rental car or other transportation while your vehicle is being repaired after a covered accident.
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Gap insurance. Gap insurance pays off your auto loan if your car is totaled and the payout is less than your loan balance.
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Accident forgiveness insurance. Accident forgiveness insurance prevents your car insurance premiums from going up after your first accident.
Property damage liability is one type of auto liability insurance. In most states, property damage liability is combined with bodily injury liability to form complete liability coverage. Liability insurance covers the costs of others from accidents you cause.
Each state defines a minimum required level of property damage liability insurance, ranging from $5,000 in Massachusetts, New Jersey, and Pennsylvania to $25,000 in multiple states.
You’re legally liable for damage costs that exceed your insurance limit. The other property owner involved may sue you to secure a judgment. With a judgment against you, the courts can take funds from your bank accounts, seize or put a lien on your property, or garnish your wages.
In auto insurance, 100/300/100 refers to liability coverage. The first number, $100,000, specifies the maximum per-person payout for bodily injury. The second number, $300,000, is the maximum per-accident payout for bodily injury. And the last number defines the property damage limit of $100,000 per accident.
Amy Danise and Tim Manni edited this article.
