What Is Personal Liability and Property Damage?

Definition & Examples of Personal Liability and Property Damage

Man involved in car accident takes photos for an insurance claim
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Personal liability and property damage is a type of car insurance coverage that protects you in the case of at-fault accidents that cause injury to another person or damage to property. In some states, it is the minimum coverage you must have to drive legally.

Learn what personal liability and property damage insurance does and does not cover, and how this can impact you if you are ever in an accident.

What Is Personal Liability and Property Damage?

Personal liability and property damage insurance is a type of coverage that kicks in if you are ever in a vehicle accident. For either type of coverage to kick in, you generally have to be the at-fault party in the accident.

In an at-fault accident, whether with another driver or an inanimate object like a lamp pole, the accident was caused by your own error. Being negligent or at-fault in an accident makes you liable for the damages you caused.

The personal liability portion of the insurance covers injuries that you cause to other people. The property damage portion covers damage to personal or public property caused by your vehicle.

Personal liability and property damage insurance don't cover damage to your own vehicle. For that, you will need collision coverage.

Personal injury and property damage insurance is fundamental coverage for all vehicle insurance policies.

Alternate name: Bodily injury and property damage

Acronym: PLPD

How Does Personal Liability and Property Damage Work?

Depending on the type of accident you are in and the damage it causes, you may need either or both parts of the coverage.

Personal Liability

Personal liability can also be referred to as bodily injury coverage. Personal liability can cover the injuries, lost wages, pain, and suffering of the drivers, passengers, or pedestrians caused by an accident in which you are at fault.

Liability coverage is often written as a fraction, like 20,000/40,000, on your insurance policy. These are the maximum amounts of damage for which you are covered.

The first number is the maximum amount to be paid out per person. The second number is the maximum to be paid out per accident.

Property Damage

Property damage is included in all vehicle insurance policies. This coverage kicks in if you cause damage to property with your vehicle, such as:

  • Other vehicles
  • Street signs or lamp posts
  • Buildings
  • Walls or fences
  • Mailboxes

The coverage is typically displayed as a third number after your personal liability coverage. It usually looks like a three-part fraction, such as 100,000/300,000/100,000.

The last 100,000 is the property damage limit. This is how much your insurance company will pay out per accident in property damage claims.

You will not be responsible for paying the deductible when either personal liability or property damage coverage kicks in. However, if you are at-fault in an accident, your insurance rates are sure to go up.

How Much Does Personal Liability and Property Damage Cover?

How much your insurance company will cover if you cause an accident depends on two factors:

  1. The limits of your insurance policy
  2. How large the claims filed are

If multiple people are injured in an accident, claims are paid out on a first-come, first-serve basis. This means whoever files a claim first has the first opportunity at being covered up to the stated limits.

Because personal injury coverage is paid out in first-come, first-served order, you shouldn't delay in filing a claim if you’re injured in an accident caused by another person.

The maximums stated in your policy are the ceiling for what your insurance company will have to pay. If individuals suffer injuries worth more than the insurance coverage you have, they can also try to hold you accountable for more by taking you to civil court.

For example, if you hit another vehicle with four people in it, all four people could sustain injuries. If your personal liability limits are 100,000/300,000 and each person in the other vehicle files a claim with your insurance company for $20,000, the total amount is less than $100,000 per person and $300,000 per accident.

If, however, four people are more seriously injured and file claims for $100,000 each, plus the driver files a claim for $10,000 in property damage to their car, that exceeds your insurance coverage of $300,000 per accident. You could be sued and held personally responsible for remaining damages that the injured parties were unable to collect from your insurance carrier.

How Much PLPD Coverage Do I Need?

Minimum mandatory coverage varies by state, and some states have different rules for out of state versus in-state accidents. When you buy a policy, talk to your insurance agent to ensure you have sufficient coverage for the state where you live.

Michigan has a unique no-fault auto insurance structure. As a result, the state has different personal liability and property damage requirements for drivers than most other states, including Residual Bodily Injury and Property Damage Liability (BI/PD).

Limits for PLPD insurance of 100,000/300,000 are generally sufficient for most drivers. If you need or want higher limits, you can consider purchasing an umbrella policy.

Key Takeaways

  • Personal liability and property damage is a type of car insurance coverage that protects you in the case of at-fault accidents.
  • The personal liability portion covers injuries to another person. The property damage portion covers damage your vehicle causes to inanimate objects such as another vehicle or a mailbox.
  • Policy limits are generally written as fractions, such as 100,000/300,000/100,000. The first number is the maximum per individual person, the second number is the maximum per accident, and the third amount is maximum for property damage.

Article Sources

  1. National Association of Insurance Commissioners. "Consumer Alert: 9 Common Myths About Insurance." Accessed July 24, 2020.

  2. National Association of Insurance Commissioners. "A Consumer's Guide to Auto Insurance," Pages 1-2. Accessed July 24, 2020.

  3. National Association of Insurance Commissioners. "Overview: Auto Insurance: Liability." Accessed July 24, 2020.

  4. National Association of Insurance Commissioners. "Overview: Auto Insurance: Property Damage." Accessed July 24, 2020.

  5. Michigan.gov. "Michigan's New Auto Insurance Law Goes Into Effect; Consumers Encouraged to Shop Around." Accessed July 24, 2020.

  6. Michigan.gov. "Frequently Asked Questions: Information on Purchasing Auto Insurance: What Auto Insurance Do I Have to Purchase?" Accessed July 24, 2020.