--- title: What Is Liability Car Insurance? | Definition | Meaning | Explanation description: Liability car insurance is a type of auto insurance that covers people or property harmed by a driver. image: https://www.realized1031.com/hubfs/social-suggested-images/Realized_Glossary_Graphic-4.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Liability Car Insurance Liability car insurance is a type of auto insurance that covers people or property harmed by a driver. Liability insurance does not cover the driver. Rather than being sued by someone who the driver causes harm to, liability insurance is meant to provide financial protection for the driver. Some states require liability insurance to drive. In states that are no-fault insurance, drivers must purchase personal injury protection (PIP). PIP protects the driver and their passengers. In no-fault states, drivers are required first to file a claim with their insurance company, even if they are not at fault in an accident. There are two components of liability insurance — bodily injury and property damage. Bodily injury covers those that are injured when the driver is at-fault. This includes immediate and ongoing medical expenses, funeral costs, and any legal fees resulting from a lawsuit. Property damage covers damage to property outside of bodily injury. This includes the other driver’s car, buildings, and other non-human property involved in the accident. Liability insurance does have limits. Limits are configurable by the policyholder. The higher the limit, the more the policy will cost. One determining factor when choosing a policy limit is the amount of assets that a person wants to protect. If someone has $1 million in assets and chooses a $100,000 liability policy, they are leaving the remaining $900,000 of the assets potentially exposed to a lawsuit from injury or property damage. Regardless of the limit chosen, any expenses over the limit must be covered by the at-fault driver. **Three Types Of Coverage** Liability insurance limits are broken down into three types: Bodily injury — limit on expenses related to the injury of each person other than the driver. For example, each individual may be covered up to $50,000. Property damage — limit on expenses related to property damage. As an example, all property involved may be covered up to $25,000. Bodily injury per accident — this is the total that the insurance company will pay for all individuals involved. Using the above $50,000 per individual, the maximum per accident might be $200,000. However, if there are five people injured and each requires $50,000 in medical expenses, the at-fault driver is responsible for the remaining $50,000. Learn Ways To Help Build Long-Term Real Estate Wealth [![Get Tips For Managing Real Estate Wealth](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-eBook-250c.jpg?width=250&height=250&name=IPWM-eBook-250c.jpg "Learn new ways to use real ...") ](https://www.realized1031.com/glossary/liability-car-insurance#blogform) Download eBook ---   --- ### Get Tips For Managing Real Estate Wealth ![Learn Ways To Help Build Long-Term Real Estate Wealth](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-eBook-550.jpg?width=550&height=650&name=IPWM-eBook-550.jpg) Learn new ways to use real estate to pursue your wealth goals. By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Liability car insurance is a type of auto insurance that covers people or property harmed by a driver. Liability insurance does not cover the driver. Rather than being sued by someone who the driver causes harm to, liability insurance is meant to provide financial protection for the driver. Some states require liability insurance to drive. In states that are no-fault insurance, drivers must purchase personal injury protection (PIP). PIP protects the driver and their passengers. In no-fault states, drivers are required first to file a claim with their insurance company, even if they are not at fault in an accident. There are two components of liability insurance — bodily injury and property damage. Bodily injury covers those that are injured when the driver is at-fault. This includes immediate and ongoing medical expenses, funeral costs, and any legal fees resulting from a lawsuit. Property damage covers damage to property outside of bodily injury. This includes the other driver’s car, buildings, and other non-human property involved in the accident. Liability insurance does have limits. Limits are configurable by the policyholder. The higher the limit, the more the policy will cost. One determining factor when choosing a policy limit is the amount of assets that a person wants to protect. If someone has $1 million in assets and chooses a $100,000 liability policy, they are leaving the remaining $900,000 of the assets potentially exposed to a lawsuit from injury or property damage. Regardless of the limit chosen, any expenses over the limit must be covered by the at-fault driver. Three Types Of Coverage Liability insurance limits are broken down into three types: Bodily injury — limit on expenses related to the injury of each person other than the driver. For example, each individual may be covered up to $50,000. Property damage — limit on expenses related to property damage. As an example, all property involved may be covered up to $25,000. Bodily injury per accident — this is the total that the insurance company will pay for all individuals involved. Using the above $50,000 per individual, the maximum per accident might be $200,000. However, if there are five people injured and each requires $50,000 in medical expenses, the at-fault driver is responsible for the remaining $50,000.", "author" : { "@type" : "Organization", "email" : "marketing@realized1031.com", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2022-06-27T15:21:23+0000", "datePublished" : "2022-06-27T15:21:23+0000", "description" : "Liability car insurance is a type of auto insurance that covers people or property harmed by a driver.", "headline" : "Liability Car Insurance", "image" : { "@type" : "ImageObject", "height" : 627, "url" : "https://f.hubspotusercontent10.net/hubfs/733513/social-suggested-images/Realized_Glossary_Graphic-4.jpg", "width" : 1200 }, "mainEntityOfPage" : "https://www.realized1031.com/glossary/liability-car-insurance", "name" : "Liability Car Insurance", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" } } ```