A few years ago, Menard Solve was sandwiched in a three-car accident. He was driving in Philadelphia, PA when the SUV in front of him stopped abruptly. Forced to brake, he was also rear-ended by the car behind him.
While he was sued by the SUV driver for half a million dollars for injuries and minor vehicle damage, the other driver got $70,000 in both property damage and bodily injury. Solve’s Prius C sustained $13,000 in damage.
The silver lining in an otherwise prickly situation? Solve did not skimp on his car insurance. He had a policy with $250,000 maximum coverage for bodily injury per person, $500,000 for bodily injury per accident, and $250,000 for property damage per incident.
His car insurance covered body property damage and bodily injury. He ended up only paying $1,000 for the deductible. And he received $500 from the driver who rear-ended him. All in all, he only paid $500 out-of-pocket for everything.
Here’s what you need to know about property damage liability coverage:
What is property damage liability?
Alongside uninsured motorist coverage and bodily injury liability, which is coverage that pays for the injuries of other drivers and their passengers when you’re at fault in a car accident, property damage liability is part of standard car insurance.
It covers damage that you cause to another vehicle, their valuables, or property, such as the side of a building, lamp post, tree, or a fence. In some states, it could also cover damage that someone else who is driving your car — with your permission — causes.
Almost every state in the U.S. makes it mandatory to have property damage coverage. The only two states that don’t require car insurance are New Hampshire and Virginia.
(Note: In New Hampshire you need to be able to cover losses from an accident where you’re at fault. And in Virginia, if you decide to opt out of car insurance, you’ll still need to pay an annual uninsured motor vehicle fee of $500.)
What does property damage liability cover?
Besides damage to other drivers’ vehicles or property, it also covers their personal items in the car during the accident. For instance, maybe they were on their way to a wedding. If the accident damaged the wedding gift, they could file a claim to potentially receive payout for the cost of the gift.
Bodily injury liability covers per incident and per person. But for property damage liability, it’s typically per accident.
If you cause an accident, property damage liability doesn’t cover your own vehicle or property — just the other drivers’. You would need collision insurance on your policy to have your own vehicle covered.
How does property damage liability work?
Should you be at fault, you would file a claim with your insurance company to receive the payout.
For Solve, the initial filing of the claim went smoothly. There was multiple back-and-forth between Solve, his insurance company, and the lawyer assigned to his case.
Besides asking whether Solve had additional liability insurance, such as an umbrella policy, they asked him to provide any photos he took of the crash scene.
What are some scenarios when it comes in handy?
As Solve’s experience shows, if you caused the accident, property damage will cover damage to another driver’s vehicle. It will also cover damage to property. This includes not only private property — such as someone’s building, or a fence — but also property that’s owned by the government, such as a tree on the sidewalk, or a utility pole.
Not only does it cover this sort of damage in the case that you’re in the driver’s seat, but it will pay for damage should another driver who has your permission be operating your car.
In case you get sued, as in Solve’s situation, liability insurance would kick in. It would protect your assets. Should the payout during the lawsuit be higher than the coverage amounts, you would be financially responsible for whatever exceeds the payout.
What are the requirements for coverage?
The minimum coverage amounts for varies per state. State minimum coverage might not be enough to take care of the costs of a serious fender-bender. Or in the case of Solve, one that’s more complicated or ends up with a court case.
In California, minimum coverage for property damage liability is $5,000 per incident. In New York, it’s $10,000 per accident. And if you live in Alabama, it’s $25,000 per accident.
How much property damage liability coverage do I need?
This depends on your needs, preferences, and what you can afford.
Besides meeting the state minimum coverage, you’ll want to make sure you get enough coverage to pay for damages in the case of a fender bender. You should also have enough coverage to cover all members of your household. It should be within your budget.
If you can’t pay out-of-pocket for a serious accident, you might want to consider getting higher coverage amounts for property damage liability.
What does it cost?
Property damage liability coverage varies, and depends on a handful of factors: the type and extent of coverage, your age and gender, your driving record, location, and how frequently you use your car.
The higher the coverage amount, the higher your insurance premium. Conversely, the lower your coverage amount, the lower your premium.
The rates among car insurance companies might vary. When shopping around for auto insurance, make sure you get quotes for the same level of coverage. Otherwise, it’ll be like comparing apples to oranges.
If you add several cars to your homeowners policy, have a clean driving record, or are eligible for a discount, your car insurance premium could be lower.
In Solve’s case, having higher coverage softened the blow of the multi-car accident. And it prevented a potential financial disaster.
Solve’s premium for six months was $600 for three cars in his household.
“Getting involved in an accident is a time-consuming process that should be avoided as much as possible,” says Menard. “I’m grateful that nobody really got hurt and that my auto insurance premiums remained the same in spite of the accident.”