Liability Coverage.

In plain English

Liability coverage is the core of an auto insurance policy and is required in nearly every state. It splits into two parts: bodily injury liability, which pays for other people's medical costs when you are at fault, and property damage liability, which pays to repair what you damaged, like another car or a fence. It does not pay for your own car or your own injuries. Each part has limits, the maximum the insurer will pay, often written as three numbers like 25/50/25.

01Why it matters

If you cause a serious crash and your liability limits are too low, you can be personally sued for the rest, putting your savings and wages at risk. Carrying limits that match what you have to lose is the whole point of this coverage.

02The math, step by step

Limits written as 25/50/25 mean up to $25,000 in bodily injury per person, $50,000 in bodily injury per accident, and $25,000 in property damage per accident. If you cause $40,000 in injuries to one person and your per-person limit is $25,000, you could owe the remaining $15,000 yourself. Required minimum limits vary by state, so check your state insurance department for the figures where you live.

03What this is NOT

04Receipts

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