Each state sets a minimum for how much liability coverage a motorist must carry. For example, a state might require all drivers to have liability insurance that covers $25,000 for injuries to one person, $50,000 for injuries to multiple people, $50,000 for death of one person, and $10,000 for property damage1. Drivers can typically buy more liability insurance than their state’s required minimums, and it’s often smart to do so since medical bills can be very expensive.
If you have considerable assets to protect from a possible lawsuit, you may also want to consider buying an umbrella insurance policy, which can increase the liability coverage on both your auto and homeowners insurance policies to $1 million or more.
Gap insurance is another type of coverage you may need if you drive an expensive vehicle that is likely to depreciate relatively quickly.
Here is an example of how liability car insurance might work in a state without no-fault insurance. Let's say the motorist had the following liability car coverage with their insurance company:
The insured gets into an accident involving multiple people and is ruled at-fault for any damages.
The at-fault driver's liability would be covered in this instance because each person who was involved in the accident had medical expenses of under $60,000. Also, the total costs for everyone involved (except the at-fault driver) was $120,000, which is less than the per-accident bodily injury limit.
It's important to note that some policies will not cover any expenses beyond the per-accident limit even if the per-person limits have not been exceeded. Using the example above, let's say each person had medical expenses of $55,000. Although those individual costs all fall within the per-person limit of $60,000, the total cost of $165,000 is over the per-accident limit of $150,000. As a result, the at-fault driver would be liable for the additional $15,000.