What are the types and limits of liability coverage?

About third-party liability coverage

Most states (other than "no-fault" states) mandate that you have a set amount of third party liability coverage. Third party coverage refers to both bodily injury coverage and property damage coverage. These policies cover the damage caused to a third party in an accident in which the policy holder is at fault.

Bodily Injury
Bodily injury coverage, also referred to as medical payments, is noted on an auto insurance by a set of numbers such as 50/100 or 100/300.

The first number indicates the maximum amount of coverage for one person in thousands of dollars. The second number indicates the maximum amount of coverage per accident in thousands of dollars.

For example, if you have 50/100 coverage, that means the maximum amount your policy covers is $50,000 for one person’s injuries and $100,000 per accident.

Property Damage
If you have property damage coverage, there is a third number in the series of numbers such as 50/100/25. The third number indicates the amount of policy coverage to repair of replace the third party’s property in thousands of dollars.

Visit the Insurance Information Institute Web site to find out how much third party coverage is required in your state.