Insurance is designed to help you pay for unexpected expenses that you'd have trouble affording on your own. If you cause damage to someone else's property, that person might try to sue you to get cash for the damage you caused. Property liability insurance is a type of insurance coverage that helps pay for damage you cause to property that isn't yours.

Liability Basics

When you harm someone else's property, are you are liable or legally accountable for the damage. In other words, liability refers to the legal responsibility for your actions. Liability insurance protects you from having to pay for legal obligations out of your own pocket. For example, if you cause a car accident and the other driver's vehicle suffers $20,000 worth of damage, you have a $20,000 liability. If you have property liability coverage, it would pay for the damage for you so that the other driver can't sue and make you pay the repair bill out of your own pocket.

Auto Liability Insurance

Property damage liability coverage most commonly arises in auto insurance. Most states require that you buy a minimum amount of liability insurance to drive. Auto liability coverage is split into three parts: bodily injury liability per person, bodily injury liability per accident and property damage liability. Bodily injury coverage pays for things like medical bills and lost wages other people suffer in accidents you cause while property damage coverage pays for the cost of repairs to the other vehicle.

Coverage Limits

Although liability insurance can help pay for property damage, it might not pay for everything if you cause a large amount of damage. For instance, if your auto property damage liability insurance has a limit of $25,000 but you plow into a sports car that is worth $60,000, your insurance only pays for $25,000 of the damage. In this case, you'd still be responsible for paying the remaining $35,000.


The amount of liability coverage required by state law is often relatively low and may not protect you against the full cost of damage you cause in major accidents. Buying liability coverage with higher limits helps ensure that you won't end up having to pay for property damage out of your own pocket.