Liability Insurance Covers Others—Not You
Liability insurance pays for damage and injuries you cause to other people and their property when you're at fault in an accident.
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What Is Liability Insurance Insurance?
Liability insurance has two components: bodily injury liability pays medical bills, lost wages, and legal fees when you injure someone in an at-fault accident, while property damage liability covers repair costs to vehicles, fences, buildings, or other property you damage. This coverage activates only when you are determined to be at fault, and it pays the other party directly or their insurer after a claim is filed against you.
Who Needs Liability Insurance Insurance?
Liability insurance is legally required in all states except New Hampshire and Virginia, making it non-optional for nearly all drivers regardless of age. For drivers 75 and older with retirement savings, home equity, or other assets, carrying limits well above state minimums—such as 100/300/100 or 250/500/100—protects those assets from lawsuits after a serious at-fault accident. This coverage remains the foundation of any auto insurance policy and should never be dropped, even when reducing or eliminating collision and comprehensive coverage on older vehicles.
If you rent, have limited savings, and your income is protected by Social Security exemptions, state minimum liability may be sufficient, but verify your state's exemption laws first. Review your limits annually as your asset situation changes, and prioritize maintaining liability coverage over collision or comprehensive when managing premium costs after age 75.
How Much Does Liability Insurance Insurance Cost?
- State-mandated minimum limits: states like California require 15/30/5, while Alaska requires 50/100/25, directly affecting base premium costs.
- Annual mileage and usage patterns—drivers reporting under 5,000 miles per year may qualify for low-mileage discounts that offset age-based increases.
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