Just like Bodily Injury Liability Insurance, Property Damage Liability is mandatory in most states and should not be overlooked. As the name implies, this type of coverage provides payment for damage you might cause to someone else's property. In most cases it is a car, but it can also refer to buildings and other structures, such as stores, offices, homes, or fences, lamp posts, telephone poles, etc. Property Damage Liability coverage pays for the repair or replacement of things you damaged other than your own car.
In many states drivers are required to purchase a minimal amount of Property Damage Liability coverage of $5000. However, to be adequately covered means to have enough money in case you are at fault for an accident to be able to repair or replace the other party's car or some other damaged possessions.
If you get in a serious accident, minimum liability coverage that is required by your state won't cover all potential costs you will surely face. If we take a classical example when a person hits someone else's expensive car or damages some other expensive property and gets sued, Property Damage claims can be very large and an unfortunate driver will have to pay a major part of the claim out of his/her own pocket. Thus you need to carry both Bodily Injury and Property Damage Liability coverage beyond your state's minimum to avoid such situations.
The more valuable assets you possess the greater risks you take if you are not properly covered. In some serious cases drivers at fault are forced to liquidate their property, savings and even their future earnings. Therefore it is important to invest in Property Damage Liability Insurance to secure yourself against such risks.
General recommendation is to purchase the minimum of $50,000 for every vehicle in your possession. It makes sense to buy as much Property Damage Liability as you can afford if the thought of going beyond your regular expenses in case of an accident sounds stressful enough to you.
There are different limits of Property Damage Liability coverage corresponding to various protection levels. It is wise to determine your net asset value you have at your disposition and could lose in case you cause damage to others in an accident. Based on these figures, you will get the approximate amount of liability coverage you need to purchase. Mind that increasing the liability coverage limit you increase the policy premium as well.
You can choose between a combined single limit policy and a split limit policy. Just like the names of these two limit types imply, the first type of limit coverage will provide you with one single amount of coverage and you can use the entire amount for Bodily Injury and Property Damage Liability, and the second limit coverage will split the coverage amount and divide the protection amount that you have for Bodily Injury and Property Damage Liability.
In policies with split limits the third number in the split figure indicates the limit of Property Damage Liability per accident. In a recommended 300/300/100 split limit, 100,000 is the Property Damage limit component, with $300,000 of Bodily Injury per person and $300,000 per accident.
Combined single limit policy offers a single maximum amount for Bodily Injury and Property Damage Liability, for instance, $300,000. Single limit policy amount can be divided in any combination and thus is considered more flexible.
Property Damage Liability coverage is limited to the damage you might cause to the other person's vehicle or property. Uninsured or underinsured drivers who are at fault for an accident will have to incur expenses for their car on their own.