Liability Limits: The Number on Your Policy That Matters Most Once Your Teen Drives

When the premium jumps after adding a teen, there’s a tempting place to look for savings: the liability limits. They’re just numbers on the declarations page, and lowering them makes the bill smaller.

This is the one cut I’d ask you not to make.

What are liability limits?

Liability coverage pays for the damage your driver causes to other people: their injuries and their property. The limits are usually written as three numbers, like 25/50/25. That means $25,000 per injured person, $50,000 per crash for all injuries combined, and $25,000 for property damage.

When a crash costs more than those limits, the insurance stops paying. What’s left can become the responsibility of the people on the policy.

How low are state minimum liability limits?

Every state sets a minimum, and many are low. Eighteen states set theirs at 25/50/25, including Ohio. California only recently raised its minimum from 15/30/5 to 30/60/15, effective January 2025.

Think about what $25,000 buys after a serious crash. An ambulance ride, a few days in a hospital and some follow-up care can exceed it quickly. A newer SUV can exceed a $25,000 property limit by itself.

The Insurance Information Institute says it plainly: you’ll likely need more liability insurance than your state requires, because accidents cost more than the minimum limits.

State minimums make insurance affordable. They were never meant to cover a serious crash.

Why does a teen driver change how much coverage you need?

A new driver doesn’t change what a crash costs. They change how likely one is. Teen drivers crash at several times the rate of older drivers per mile, with the highest risk in the first months alone.

So the period when your household is most likely to have a serious claim is exactly the period when low limits are most likely to run out. If you were ever going to raise your limits, this is when.

What to consider

Higher limits. A common recommendation is at least 100/300/100 for most households, and more if you have significant assets to protect. Raising limits usually costs much less than people expect, because the first dollars of coverage are the most expensive. Ask your agent for quotes at two or three levels and compare.

An umbrella policy. An umbrella adds a large layer of liability coverage, typically $1 million, above your auto and home policies. The III puts the typical cost at $200 to $300 a year for a million dollars of coverage. Umbrella insurers usually require certain minimum limits on the underlying auto policy, so ask what they are.

Uninsured and underinsured motorist coverage. This protects your family when the other driver’s limits are the ones that run out.

Where to save instead

If the teen premium is hard to absorb, look at the car they drive, deductibles on older cars, discounts, and shopping across insurers. More on all of that in Add Them to Your Policy, or Get Them Their Own? and What a Teen Driver Actually Costs.

Just leave the liability limits alone. Or better, raise them.

This week

Find your declarations page and look at three numbers. If they’re your state’s minimum, call your agent and ask what 100/300/100 and a $1 million umbrella would cost. It’s a ten-minute call.

I’m not an insurance agent or a lawyer, and your situation is your own. But this is one question worth asking before your teen’s first solo drive, not after.