The bodily injury liability portion of an car insurance policy covers an at-fault driver, so they are not liable for others' emergency and ongoing medical expenses, loss of income, or funeral costs. It also helps cover the policyholder’s legal fees when the accident results in a lawsuit.
Property damage liability helps cover the costs of repairing or replacing the vehicles of other drivers involved in the accident. It also covers the damage done to other forms of property by the policyholder's vehicle, such as fencing, mailboxes or buildings2.
Liability car insurance has dollar limits on each of its components, depending on the level of coverage you choose when you buy the policy. Those include:
This limit is the maximum amount of coverage for damage done to property. Any costs that exceed the limit become the responsibility of the at-fault driver.
The per-person limit is the maximum amount that the insurance company will pay out for each individual who has been injured in an accident.
The liability limit per accident is a financial cap for the total amount that the insurance company will pay for all of the individuals involved in an accident. In other words, the policy will cover medical expenses for those injured in an accident by the at-fault driver, but only up to an predetermined total. The at-fault driver would then be liable for any medical expenses above that limit.
Bodily injury liability coverage can protect your home and other assets in the event that you're sued by a driver or passenger following an accident.