Factors that affect liability-only insurance costs
A liability-only auto insurance policy typically costs less than full coverage insurance, since it contains fewer types of coverage. However, a range of rating factors impact the potential cost of liability coverage for each individual driver, including:
- Driving history: Drivers with violations or at-fault accidents on their driving record typically pay more for liability-only insurance.
- Age or driving experience: Young drivers, especially those under age 25, pay higher rates for liability insurance due to the increased risk of accidents that comes with inexperience on the road.
- Credit: Insurance companies analyze customers’ credit history with something called a credit-based insurance score. A lower score correlates to a potentially higher risk of future claims, so insurers tend to charge higher rates for drivers with poor credit.
- Vehicle: The risks associated with your vehicle’s make and model can impact the cost of liability-only insurance, with lower rates typically assigned to cars with strong safety ratings.
State minimum coverage limits
Not all states permit drivers to purchase only liability insurance. In 26 states and Washington, D.C., drivers must also purchase some combination of uninsured/underinsured motorist coverage, personal injury protection (PIP) and/or medical payments (MedPay) coverage. Check the minimum coverage requirements in your state to understand your financial obligations when purchasing auto insurance.
What is PLPD insurance?
PLPD insurance, or personal liability and property damage insurance, is a term sometimes used to refer to auto liability insurance. PLPD insurance includes two types of coverage: bodily injury (BI) liability insurance, which pays for injuries or deaths you may cause while driving; and property damage (PD) liability insurance, which pays for damage to other parties’ property that you’re found responsible for.
PLPD insurance is typically written as split limits, with separate coverage limits for bodily injury per person, bodily injury per accident and property damage per accident. In a state with 25/50/25 PLPD limits, drivers must purchase $25,000 of BI liability per person, $50,000 of BI liability per accident and $25,000 of property damage liability per accident.
What is BI insurance?
BI, or bodily injury, refers to the part of a PLPD insurance policy that covers bodily injury to others. When you purchase BI insurance, your insurance company agrees to cover the cost of injuries you cause to others up to your policy’s set limits. BI insurance protects your assets and future earnings from potential lawsuits in the event of an at-fault accident.
