In one recent year, motor vehicle liability insurance claims alone rose by more than 20%, according to data from the Insurance Research Council. Yet many people still aren’t sure what liability means in insurance or how it protects them. It’s one of the most essential forms of coverage, but its meaning often gets lost in a sea of legal terms and policy language.
People sometimes assume that insurance is about their own protection. But liability coverage doesn’t work that way. It’s not about protecting the policyholder’s property or covering their own injuries. It’s about covering the harm they cause others when they’re at fault for an accident. That can include the cost of repairing or replacing someone’s car, their medical bills, their pain and suffering, and more.
Whether you’re trying to understand your own coverage, dealing with a recent accident, or exploring your options under Indiana law, our personal injury lawyers will break it all down for you. You can also call us at (317) 636-0808 or contact us online to review your case if you’ve been injured by someone else’s negligent actions.
What’s the Purpose of Liability Insurance? Key Takeaways
- Liability insurance covers damage or injuries you cause to others, not yourself.
- Most states, including Indiana, require minimum liability insurance for drivers.
- There are two main types of liability: bodily injury liability and property damage liability.
- Your coverage limits can significantly affect what costs you’re responsible for after an accident.
- If you’ve been injured due to someone else’s negligence, a lawyer can help you pursue compensation through their liability insurance.
What Liability Insurance Means for You After an Accident
When someone else’s negligence results in an injury, liability insurance helps cover the associated costs. That includes emergency care, follow-up treatments, lost wages, and long-term consequences—expenses that can quickly become unmanageable without insurance coverage.
In legal terms, liability refers to responsibility. If a person or company is found legally responsible for causing harm, their liability coverage kicks in to cover the costs. Liability coverage is often the first and most important source of financial recovery for injured people.
However, while many people assume the at-fault party’s insurance company will automatically do the right thing and pay them fairly for their injuries and losses, that’s rarely the case. Even a simple understanding of how insurance companies handle payments to victims can help you avoid bearing the costs of someone else’s mistakes.
Two Key Types of Liability Coverage That Affect Injury Claims
Liability insurance takes many forms, but most injury claims fall under two primary categories: bodily injury and property damage liability. These are often built into auto and homeowners policies and may also appear in business or umbrella insurance.
Bodily injury liability pays for the harm someone else caused you, including hospital bills, follow-up medical care, physical therapy, and income you lose because your injuries prevent you from working. It may also include non-economic losses, such as pain and emotional suffering, although insurers routinely dispute or undervalue these claims.
Property damage liability covers things like a damaged car, broken belongings, or even structural harm to your home or business. If someone crashes into your fence, backs into your parked car, or causes water damage through negligent plumbing work, this portion of the policy may apply.
Together, these two components form the basis of most third-party personal injury claims. But the extent of what’s covered and how much the insurer is willing to pay is heavily influenced by the policyholder’s coverage limits.
Policy Limits Can Define the Outcome of a Case
Not every insurance policy offers equal protection. One person may carry the minimum coverage required by law, while another has robust protection through umbrella or commercial policies. These differences matter more than most people realize.
In Indiana, the minimum auto liability coverage is:
- $25,000 per person for bodily injury
- $50,000 total per accident
- $25,000 for property damage
These limits are set by law (Indiana Code § 9-25-4-5), but they can fall devastatingly short of covering the full cost of an injury, especially when surgery, rehab, or long-term care is involved.
Once the policy limits are reached, the insurance company is no longer obligated to pay more. Any remaining expenses may fall on the individual or business that caused the harm, which sometimes opens the door to additional claims or lawsuits.
This scenario is why lawyers investigate whether there are multiple layers of coverage to provide additional compensation, such as umbrella policies, commercial coverage, or homeowner protections that might apply to the same incident.
Why Liability Insurance Matters After an Accident
For many injury victims, liability insurance is the only realistic way to recover meaningful compensation. The person who caused the harm may not have the resources to pay for your care, even if a court finds them responsible. But their insurance policy exists to cover exactly this type of situation.
It’s also important because insurance companies aren’t just writing checks. They’re businesses, and their goal is to pay as little as possible. If they can argue you were partly at fault, that your injuries aren’t as serious as claimed, or that their policyholder wasn’t fully responsible, they will, because it could potentially reduce their liability.
In Indiana, the law follows a modified comparative fault rule. That means your compensation may be reduced if you’re found partially responsible for the accident. And if you’re assigned 51% or more of the blame, you may be barred from recovery entirely.
Liability insurance companies often use this rule to reduce or deny claims. Even in cases where fault seems clear, the negotiations can be tense and difficult, especially when injuries are severe. An experienced personal injury lawyer can prevent insurers from unfairly blaming you for the accident and safeguard the value of your claim.
The Role of Liability Insurance in Common Injury Claims
Liability insurance plays a key role in many everyday injury scenarios, not just major accidents. If you’ve been hurt in one of the following ways, the at-fault party’s liability coverage is likely a central part of your legal recovery:
- Car, truck, or motorcycle collisions
- Slip and fall accidents on private or commercial property
- Dog bites and animal-related injuries
- Bicycle or pedestrian accidents
- Injuries caused by negligent home or business maintenance
These accidents aren’t unusual or rare. They happen every day in Indiana and across the country. And in each case, the question isn’t just “what happened?” It’s “who’s responsible, and what coverage exists to make this right?”
Liability vs. Full Coverage: What’s the Difference?
Many people hear the term “full coverage” and assume it includes everything, but that’s not always true. Full coverage typically refers to a combination of liability, collision, and comprehensive insurance. The liability portion is still only for damage caused to others.
If you’re injured in a crash and the at-fault driver only has minimum liability coverage, their “full coverage” may not be enough to cover your losses. In these cases, you may need to turn to your own underinsured motorist policy or pursue additional legal action to fill the gap.
It’s also worth noting that liability coverage doesn’t follow the vehicle; it follows the policyholder. So if someone borrows a friend’s car, causes a crash, and injures you, the insurance investigation may involve multiple layers of liability coverage and possibly even denials or disputes over who’s ultimately responsible.
What Happens When You File a Liability Claim?
Once you or your lawyer submits a claim to the at-fault party’s insurer, the claims process begins, but it doesn’t always move in a straight line. Insurance companies assign a claims adjuster to investigate, assess damages, and determine whether the policyholder is legally responsible. From there, they decide whether to accept, reduce, or deny the claim.
For someone recovering from serious injuries, this process can be especially frustrating. You might be in physical pain, facing medical bills, and missing work, while the insurance company delays a response or makes a lowball offer.
Liability claims often require documentation such as:
- Medical records and itemized treatment costs
- Photographs of injuries and damaged property
- Statements from witnesses or first responders
- Proof of lost income
- Expert opinions on long-term effects or care needs
Even when the facts seem clear, insurers may still dispute causation or argue that your injuries are unrelated or exaggerated. An experienced personal injury lawyer can help protect your rights during this process, especially if liability is contested or coverage is limited. Having an advocate to handle all the legal heavy lifting can lift the stress from you and give you more time and space you need to heal.
When Liability Insurance Doesn’t Pay
Liability coverage isn’t guaranteed even when someone is clearly at fault. Insurance companies often rely on exclusions, policy loopholes, or blame-shifting tactics to avoid paying out full compensation. Understanding these barriers is critical for anyone pursuing a claim.
Common liability claim denials include:
- The insurer claims the injuries predated the incident
- They argue the policyholder wasn’t at fault or not entirely at fault
- They cite policy exclusions like intentional harm or business use
- Coverage limits have already been exhausted
- The policy was inactive or lapsed at the time of the incident
Each of these issues requires a careful review of the policy language and surrounding facts. Sometimes, a denial can be appealed. Other times, a lawsuit may be necessary to compel a fair outcome.
Frequently Asked Questions About the Purpose of Liability in Insurance
What is the statute of limitations for personal injury cases in Indiana?
Indiana’s statute of limitations generally gives you two years from the date of the injury to file a personal injury lawsuit under Indiana Code § 34-11-2-4. This is the standard deadline for most cases, but some situations involve shorter filing windows or special rules that may affect how much time you have.
Certain claims involving government entities, minors, or delayed discovery may follow different timelines, and some require formal notice long before the two-year period ends. Because these exceptions create tighter restrictions, many people choose to speak with a lawyer as soon as possible to avoid losing the ability to pursue compensation
What’s the difference between liability and full coverage?
Liability coverage pays for damage the policyholder cause to others, while full coverage includes collision and comprehensive insurance that may pay for your own vehicle damage. However, “full coverage” is not a legal term and doesn’t always mean everything is covered.
Can someone sue me if I don’t have liability insurance?
Yes. If you cause an accident and don’t have liability coverage, the injured party may sue you directly for damages. You could be held personally responsible for medical bills, lost income, and other losses.
What happens if the at-fault party doesn’t have enough liability insurance?
If the at-fault party’s insurance doesn’t fully cover your damages, you may be able to seek additional compensation through underinsured motorist coverage, umbrella policies, or a civil lawsuit, depending on the circumstances.
Is liability insurance required in Indiana?
Yes. Indiana law requires all drivers to carry minimum liability insurance. Failing to carry coverage can result in license suspension, fines, and loss of financial protection in the event of a crash.
Does liability insurance cover emotional distress or pain and suffering?
Yes, it can, but only under certain conditions. Liability insurance may pay for emotional distress or pain and suffering if those losses are tied to a covered physical injury caused by someone else’s negligence. Insurance companies typically scrutinize these claims closely, and they may require strong supporting documentation such as medical evaluations or expert opinions.
Can multiple liability insurance policies apply to the same accident?
Sometimes, yes. In some injury cases, more than one liability policy may be available, especially if the person or business responsible has separate auto, homeowners, commercial, or umbrella insurance.
If multiple people share fault, each may have their own coverage that could contribute to a settlement. Different insurers may argue over who should pay what. A lawyer who handles your claim can identify all available policies and maximize your recovery.
What should I do if the insurance company denies my liability claim?
Immediately contact an attorney.
A denial means the insurance company refuses to pay for your damages. While an insurer may overturn its denial if it made a mistake, a knowledgeable lawyer provides your best opportunity to review the denial, identify available coverage, and file a lawsuit to pursue the compensation you deserve.
How does a lawyer establish legal liability after an accident?
A lawyer establishes liability by proving the other party acted negligently and their negligence directly caused your injuries and losses. This process involves gathering evidence, such as police reports, medical records, and witness statements, to build a case that clearly demonstrates the other party holds the legal responsibility for the harm you suffered.
Getting Help After an Injury Involving Liability Insurance
William W. Hurst, Personal Injury Lawyer in Indianapolis
Recovering from an accident is hard enough. You shouldn’t have to untangle insurance policies, decode legal terms, or fight adjusters just to get the support you need. Liability insurance is supposed to help when someone causes you harm, but getting that coverage to actually work in your favor often takes experience, strategy, and persistence.
At Hurst Limontes, we’ve helped injured Hoosiers for over 40 years by holding at-fault parties accountable and compelling their insurers to do what’s right. Whether you were injured in a car crash, hurt on someone else’s property, or dealing with a denied claim, our team will handle the legal and insurance process from start to finish.
You don’t need to manage this alone and you shouldn’t have to. We’ll review your case for free, explain your options in plain language, and fight for your full and fair compensation. Call (317) 636-0808 or contact us online to schedule your free consultation today.
