Liability Coverage for Property Damage

Liability coverage comes in two general varieties – property damage and bodily injury, and property damage liability coverage is the simpler of the two.  It provides coverage for exactly what it says – the property of other people, which we may be responsible for damages in a motor vehicle incident.  If we cause an accident and damage another person's property, they are entitled to receive compensation from us to pay for the repair or replacement of the damaged property, or vice versa if someone else is responsible for causing damage to our property.  Of course, there are also some exceptions to what liability insurance will cover.

How Much Property Damage Liability Coverage Should We Have?

Most states require vehicle drivers and owners to carry a minimum amount of property damage liability insurance.  In California, that minimum amount is $5,000 – we have to present proof of coverage in at least this minimum amount (plus the minimum required bodily injury coverage) in order to register our vehicles each year.  Not having any liability coverage – that is, owning or driving an uninsured motor vehicle – is a dangerous and unwise thing to do.  In addition to potentially having to pay an entire property damage claim or bodily injury claim out of your own pocket if you cause an accident, merely operating a vehicle without the required coverage can result in tickets, fines, and even suspension of your driver's license.

But once we got the minimum amount of property damage coverage, the question then is how much more we should carry.  Obviously, many folks may have a hard time just affording the minimum required liability coverage, and increasing their "policy limits" may simply not be affordable.  If we can afford more coverage, however, then we should consider increasing our liability insurance limits in order to provide ourselves greater financial protection should we accidentally cause property damage and/or injuries to other people in an accident.  The reason for this is simple – once your insurance has paid out that $5,000 minimum property damage liability coverage for an accident, you as an individual become responsible for anything still owed on top of that amount for repairing or replacing a vehicle or other property that you may have damaged.  And have you looked at vehicle repair costs lately?  The minimum of $5,000 in coverage doesn't go very far.  Just a moderate amount of vehicle damage can easily exceed this amount.  Can you afford the risk of paying a much larger amount out of pocket to repair or replace someone's vehicle?

How Does a Property Damage Liability Claim Work?

If our property is damaged in a motor vehicle incident caused by another person, then we can make claims against the property damage liability policies of the person(s) legally responsible for that property damage.  That definitely includes the policy on the vehicle driven by the negligent driver (or drivers). If the person(s) driving is different from the person(s) owning the vehicles, then we may be able to make claims against the property damage liability policies of the individual drivers, as well.  Was the responsible driver on the job?  If so, then we likely will have a liability policy of that driver's employer available for claims, as well.  In short, there may be one, two, or even many different property damage liability policies available to us – sorting all this out in one place where an experienced personal injury attorney can certainly help if you've been injured in an accident.

Once you or your attorney has figured out which insurance policy or policies may be available to handle your property damage and has put those insurance companies on notice that a claim is being presented, it's then necessary to gather and submit evidence showing what was damaged, why their policyholders are responsible for the damage, and what it will cost to repair or replace the damaged property.  Hopefully, the responsible driver/owner has already admitted to their insurance company the facts necessary to show that they are responsible for having caused the property damage.  If not, it may be necessary to wait for a copy of a police traffic collision report to be issued, showing who was responsible for the traffic incident before a property damage liability claim can be processed.  If there is no police report (or if the officer couldn't conclude who caused the collision), and if the other driver won't take responsibility, it can become very challenging and time-consuming to prove responsibility for your property damage.  Remember that another driver/owner's liability insurance company isn't under any obligation to pay your claims until it is reasonably clear that their policyholder was responsible for your damages.

If you are unfortunate enough to find yourself in the situation of having a property damage claim either denied or delayed due to challenges proving who was at fault for the incident, then you certainly should look at using any collision coverage that you may have on your own insurance policy.  Since collision coverage pays for your own vehicle damage regardless of who was responsible for causing it, it can provide repair or replacement funds much faster than a property damage liability claim that isn't quickly admitted.  You may have to pay a deductible under your own collision coverage to get your property repaired, but at least you can get the repair process underway.  And if it later is proven that the other driver/owner was responsible for the damage, you can collect the deductible from their insurance or from them directly if they are uninsured.

Once a property damage liability claim adjuster has the evidence necessary to prove their driver/owner is responsible for causing your property damage, they will issue a check either to you or, if you prefer, to a body shop handling your vehicle repairs.  They will also usually send a release – a legal document for you to sign saying that you accept their offer and will not sue or pursue their policyholder further for property damage claims.

How Do I Prove the Value of a Property Damage Liability Claim?

The proof of your property damage value depends upon the type of property, and how badly damaged it was.  Most often, the type of property involved in these claims is a motor vehicle – a passenger car, truck, or motorcycle.  For these types of vehicles, it's usually fairly straightforward to determine the value of the property damage claim -- either the cost of repairing the vehicle is within a certain percentage of the actual cash value of the vehicle (in which case the insurance company will offer compensation based on the repair cost), or if the estimated repair cost exceeds that amount the insurance company will declare the vehicle a "total" loss and offer compensation equal to the actual cash value of the vehicle.

Proving the repair cost for vehicle damage is simply a matter of having the vehicle inspected by one or more body shops.  Frequently, the insurance company will want to have their own adjuster, vehicle inspector, or contracted repair shop take a look at your vehicle directly. If your vehicle is obviously severely damaged, or if it is an older vehicle with moderate damage (where the repair cost is likely to exceed its value), simply having the insurance inspector look at it may be the quickest route.  They will promptly total it, without the need for detailed repair estimates from a body shop.  If it looks like the insurance company will want to pay to repair the vehicle rather than total it, then it's good to have the vehicle inspected and estimated by one or more independent body shops of your own choosing.  (Separately, if you plan to pursue a bodily injury claim, it's important to have an independent repair estimate that can provide some evidence of the severity of the collision impact.)

Once the property damage liability adjuster makes an offer of money to either repair or "total" your vehicle, you are not obligated to immediately accept the offer.  These amounts are negotiable; however, you'll need some good evidence upon which to rely in your negotiations.  This is where independent body shop estimates you have gotten can be presented to show that the cost of repairs may be higher than what the insurer is suggesting.  Or if the insurance company has totaled your vehicle and is making an offer based on its actual cash value, then evidence showing the car is worth more than what they are offering is useful.  Most major auto insurance companies are fair "middle of the road" on property damage claims - particular on total offers – you'll need to do some homework to develop evidence that clearly shows your vehicle has more value than what they are offering.  Well known websites that estimate vehicle values are a good place to look, as are websites that offer vehicles for sale.  Or if there is something different or special about your car that makes it more valuable than a "standard" vehicle of its make, model, and year, showing that to the adjuster may result in an increased offer.

Liability Insurance Covers More Than Your Vehicle

Remember that property damage liability insurance can also cover pieces of property other than your vehicle.  If, for example, your cell phone or laptop computer was smashed in an accident, the repair or replacement cost for those can be claimed.  Or if you suffered an injury and your clothing was ruined, you may be able to claim that, as well.  For these types of property – the same as for your vehicle – you'll need to show what it will cost to repair the property (if it can be repaired) and/or what the current cash value (not original or replacement value) of the property may be.  Purchase receipts, repair receipts for work you've already done, and other evidence showing what the property is currently worth are all helpful for this.  For these other types of property – other than vehicles, that is – collision coverage on your own policy won't help you out.  It only covers your vehicle.  So for these, you'll either need to collect from the responsible driver/owner's property damage liability coverage or directly from the responsible individuals.

Watch the video below for more about liability insurance for property damage.

For information on more of the coverages you may (or should) have on your automobile insurance policy, check out:

• Collision coverage 
• Comprehensive coverage 
• Liability coverage 
• Uninsured motorist (UM) coverage
• Underinsured motorist (UIM) coverage 
• Medical payments (med-pay) insurance 
• Gap coverage 
• Umbrella coverage

And for more information on insurance companies, their claim tactics, and how an experienced personal injury attorney should deal with them, see:

• The Insurance Industry and Individual Companies -- Huge and Hugely Profitable
• Our Tools -- How an Experienced Personal Injury Attorney Deals with Insurance Company Tactics 
• Insurance Company Tactics -- Dirty Tricks Insurance Companies Play in Accident Claims

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