What Is Property Damage Liability Coverage?
Last Updated on October 17, 2020
Most states require property damage liability coverage on all car insurance.
Property damage liability (PDL) coverage is crucial, yet many drivers don’t fully understand it. Property damage liability coverage covers the cost of repairing someone else’s property after an accident. It can cover car repair expenses, for example, or home repair costs, depending on the type of damage you caused.
Today, we’re explaining how property damage coverage works, when to file a property damage claim, and everything else you need to know about property damage liability coverage.
How PDL Works
Property damage liability coverage is a mandatory part of car insurance. All states except New Hampshire and Virginia require drivers to have the following two types of liability coverage:
- Bodily injury liability coverage (BIL)
- Property damage liability coverage (PDL)
Both of these items cover liability, which is a general term for any damage you cause. In an at-fault accident, for example, you are liable for making the other party whole again. You caused the damage, so you have to pay for it.
Both items cover your liability, although they cover different types of liability:
- Bodily injury liability coverage covers medical bills, lost wages, and other costs incurred by the people you injure in an accident.
- Property damage liability coverage covers the cost of repairing the other person’s vehicle or other property after an accident.
These rules only apply if you cause the accident. If you cause the accident, then you are required to pay any costs linked to that accident. If you destroyed the other driver’s vehicle, for example, then you must pay to replace the other driver’s vehicle. If you only damaged the vehicle, then you must pay to repair that damage.
What’s Covered?
Depending on the accident, property damage liability coverage can cover different things. Generally, you use property damage liability coverage to repair the damage you cause to the other person’s vehicle in an at-fault accident.
If you rammed another car’s bumper at an intersection, for example, then your property damage liability coverage would cover the cost of repairing that other car’s bumper.
Or, if you T-boned a vehicle at an intersection and caused extreme damage, then your property damage liability coverage would cover the cost of replacing that vehicle. PDL insurance covers the cost of repairing a vehicle only up to the vehicle’s value. If the cost of repairing a vehicle is more than the value of that vehicle, then insurance will simply send a check for the value of that vehicle.
Property damage liability coverage can cover more than just vehicle costs: it can also cover home damage, fence repairs, business damage, and any other damage you inflict on another person’s property. If you damaged someone’s property while driving your vehicle, then property damage liability coverage should cover the cost of making that property whole again.
Common costs covered by property damage liability coverage include:
- The cost of repairing the other person’s vehicle
- The cost of replacing the other person’s vehicle
- The cost of repairing any damage to someone’s home, business, or physical property
Property Damage Liability Limits
Every state has specific rules for how much property damage liability coverage you should have. Some states require just $5,000 to $10,000 of property damage liability coverage, for example, while other states require $50,000 of coverage.
Some drivers meet their state’s minimum insurance requirements, while others exceed these minimum requirements.
Requirements vary widely between states. Drivers in California, for example, are required to have just $5,000 of property damage liability per accident. That could cover the cost of repairing a cheaper or older vehicle, but it will not cover significant damage on any newer vehicle. If you maintain $5,000 of property damage liability coverage, then you could be forced to pay thousands out of pocket.
Alternatively, Texas requires $25,000 of property damage liability per accident. That gives you added coverage against a broader range of circumstances, although it may still leave you underinsured in a serious accident.
Below is a list of the current PDL requirements by state:
| State | Minimum coverage limit per accident ($) |
|---|---|
| Alabama | 25,000 |
| Alaska | 25,000 |
| Arizona | 10,000 |
| Arkansas | 25,000 |
| California | 5,000 |
| Colorado | 15,000 |
| Connecticut | 10,000 |
| Delaware | 10,000 |
| Florida | 10,000 |
| Georgia | 25,000 |
| Hawaii | 10,000 |
| Idaho | 15,000 |
| Illinois | 15,000 |
| Indiana | 10,000 |
| Iowa | 15,000 |
| Kansas | 10,000 |
| Kentucky | 10,000 |
| Louisiana | 25,000 |
| Maine | 25,000 |
| Maryland | 15,000 |
| Massachusetts | 5,000 |
| Michigan | 10,000 |
| Minnesota | 10,000 |
| Missouri | 25,000 |
| Mississippi | 10,000 |
| Montana | 10,000 |
| Nebraska | 25,000 |
| Nevada | 10,000 |
| New Hampshire | 25,000 |
| New Jersey | 5,000 |
| New Mexico | 10,000 |
| New York | 10,000 |
| North Carolina | 25,000 |
| North Dakota | 25,000 |
| Ohio | 25,000 |
| Oklahoma | 25,000 |
| Oregon | 20,000 |
| Pennsylvania | 5,000 |
| Rhode Island | 25,000 |
| South Carolina | 25,000 |
| South Dakota | 25,000 |
| Tennessee | 15,000 |
| Texas | 25,000 |
| Utah | 15,000 |
| Vermont | 10,000 |
| Virginia | 20,000 |
| Washington | 10,000 |
| Washington, D.C. | 10,000 |
| West Virginia | 10,000 |
| Wisconsin | 10,000 |
| Wyoming | 20,000 |
You can see your property damage liability coverage on your insurance policy. An insurance policy may be expressed as three numbers, like 20/40/15. An insurance policy with 20/40/15 coverage would have:
- $20,000 of bodily injury liability coverage per person
- $40,000 of bodily injury liability coverage per accident
- $15,000 of property damage liability coverage per accident
The average state requires somewhere between $15,000 and $25,000 of property damage liability coverage. Check your state’s insurance requirements, then decide if you want the bare minimum or added coverage.
Deciding on Coverage: How Much Should You Have?
It’s important to consider your property damage liability limit when shopping for auto insurance. If you have too little coverage, then you could be forced to pay out of pocket.
Let’s say you crash into a $50,000 SUV at an intersection. The accident is 100% your fault. The SUV is destroyed. By law, you are liable for this damage. You must pay to make the other driver whole again, which means you must pay to replace the SUV you damaged.
Your state requires $10,000 of PDL coverage, and your insurance meets these minimum requirements. Your insurance pays up to the limits of your policy, which means it covers the first $10,000. However, you still owe the other driver $40,000 for the cost of the SUV. You must pay this amount out of pocket.
Some drivers are risk-averse. They avoid risk. They would rather pay a few extra dollars per month for added insurance coverage and peace of mind.
Other drivers don’t mind added risk. They would rather save money on insurance every month and take their chances.
You also need to consider your financial situation. If you have assets that could be seized in a lawsuit – like a house – then you should have enough insurance to cover those assets. If you injure another driver and his property in an accident, then you are required to liquidate all assets to cover these damages. If you only have $5,000 of property damage liability coverage, but you destroyed someone’s $100,000 SUV in an accident, then you could be left dangerously uninsured and forced to pay $95,000 out of pocket.
Final Word on Property Damage Liability Coverage
Most states require drivers to have property damage liability coverage.
Property damage liability coverage covers the cost of repairing another driver’s vehicle and other property after an at-fault accident.
If you caused an accident, then you must pay to make the other driver whole again – and that’s why your insurance covers the cost of repairing property damage.
