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How Bodily Injury and Property Damage Liability Work

Your car insurance policy is made up of many different pieces to protect you when you hit the road. While some of these coverages are optional, some may be required by your state — such as bodily injury and property damage liability insurance. These coverages protect you if you’re in an at-fault accident, and they’ll help cover costs for injuries and damages you caused to other people or their property.

Let’s take a look at how these coverages work.

Bodily Injury and Property Damage Liability Definitions

Bodily Injury Liability Insurance. This coverage is financial protection for people. If you’re at fault in an accident, bodily injury liability coverage (BI) can help cover costs for medical expenses for injuries you caused to other drivers and passengers.

Property Damage Liability Insurance. This coverage is financial protection for things. If you’re at fault in an accident, property damage liability (PD) insurance can help cover costs for the other driver’s vehicle expenses or if you damage someone’s property, such as a mailbox, home, fence, etc.

How Does Bodily Injury and Property Damage Liability Insurance Work?

Your bodily injury and property damage liability insurance are the core of your insurance policy. If you own a vehicle, your state probably requires you to at least have a minimum amount of these coverages. If you cause an accident that injures another person and/or damages their property, bodily injury and property damage liability insurance are designed to protect you from paying a substantial amount of money out of pocket to cover the related costs.

What Does Bodily Injury and Property Damage Liability Insurance Cover?

So what exactly will bodily injury and property damage liability insurance help cover? As mentioned before, they help you financially pay expenses for damages to people and people’s property. Below are some specific ways they help financially protect you.

Bodily Liability Insurance

Medical expenses. A key component of bodily injury liability insurance is that it helps cover costs associated with someone’s medical care after an accident you cause. For instance, emergency care, hospital charges, follow-up visits, as well as medical equipment (e.g. wheelchair, crutches).

Lost wages. Bodily injury liability helps cover lost wages if a person isn’t able to work due to the injuries sustained in the accident.

Legal fees. If you face a lawsuit due to the injuries you caused, bodily injury may help cover associated legal costs, like for a lawyer or settlement.

Pain and suffering. Bodily injury liability may help compensate the victim if they experience long-lasting physical pain or emotional suffering.

Funeral costs. If the accident is fatal, bodily injury liability can help cover funeral costs.

Remember, bodily injury liability coverage doesn’t pay for your medical expenses or lost income if you caused the accident.

Property Damage Liability Insurance

Damages to vehicle. If you cause an accident and damage someone else’s vehicle, you’ll be responsible to pay for the resulting expenses. This could include anything from backing into another car and putting a dent in the bumper to totaling someone’s car. Property damage liability insurance can help cover the costs to repair or replace a damages to the vehicle.

Damages to property. Sometimes car accidents occur that don’t involve another vehicle. If you cause damage to someone’s property, like if you accidentally back into their mailbox or fence, property damage liability can help pay to repair or replace the damaged property.

Property damage liability insurance doesn’t pay for damages to your car. That’s where comprehensive and collision coverage step in. These are optional coverages that can keep your vehicle safe from the unexpected.

What are the Limits of Bodily Injury and Property Damage Liability Coverage?

Almost every single state requires a vehicle to have a minimum amount of liability insurance to provide you financial protection in case of an accident. So when purchasing car insurance, you’ll have to select coverage that meets the minimum limit requirement your state has set.

States use a three-tiered system to represent their minimum liability coverage limits. For example, Arizona’s liability insurance minimums are 15/30/10. This means if you’re at fault in an accident:

  • Your insurance company will pay up to $15,000 for injury-related expenses per person. No injured individual will receive more than this amount.
  • You’re covered for $30,000 for injury-related expenses per incident. So when you add up all of the bodily injury payouts, the total can’t exceed this amount.
  • Your insurance company will pay up to $10,000 for property damage per incident.

Keep in mind, the minimum limits that a state requires is typically low and may not provide you with the level of protection you actually need.

Let’s put it into perspective. Say you live in Arizona, where you meet the minimum liability limits of 15/30/10. You’re cruising down the highway and flip your blinker on to get in the next lane. You turn to look and think you’re in the clear, but unfortunately there’s a vehicle in your blind spot and you swerve right into it. Fortunately, no one is injured, but the vehicle is pretty beat up. You find out that the damages for the vehicle came to $20,000, and since you were at fault, it’s your responsibility to pay the other party.

Thankfully you have insurance, but since you’ve chosen your state’s minimum limits for your coverage, your insurer will only pay up to $10,000 for property damage, leaving the remaining $10,000 for you to pay out of pocket.

Sure, you legally meet your state’s requirements, but instances like these are great reasons to consider higher levels of liability coverage.

Want to learn more about your bodily injury and property damage limits? Your American Family Insurance agent can help you determine coverage limits that work best for you. In the meantime, check out our underinsured bodily injury liability coverage to find out how you can protect yourself from drivers with low-coverage limits.


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