Personal liability and property damage (PLPD) insurance coverage is required in some states to drive a motor vehicle legally. Each state has unique laws that require the amount of liability coverage you must carry and may use different terms to describe it.
Note that the term “PLPD insurance” was mostly used in Michigan at one time, but that phrase is outdated. MI insurance laws changed as of 2020. The PLPD no longer prescribes minimum requirements for drivers in Michigan. MI drivers must carry “no-fault insurance,” which further covers medical care for yourself and others.
For residents of other states, you can find out about the minimum car insurance requirements by speaking to or checking with your local insurance agent. Your state’s Department of Motor Vehicles (DMV)
PLPD insurance for consumers
This article aims to explain PLPD insurance to consumers who own private vehicles. Commercial auto policies, auto fleet policies, and truck driver insurance policies will have different requirements for liability insurance, depending on your state, annual mileage, driver history, and freight type.
To understand PLPD coverage, one must first understand the concept of liability.
What is the responsibility?
In short, responsibility means responsibility.
Imagine causing a small dent in the fender in a residential neighborhood. You’re traveling at 25 mph looking for an address and accidentally back out of the car because you didn’t see a stop sign in time. Fortunately, no one was injured, but both vehicles suffered minor damage. You are the “at fault” driver, and you are responsible – responsible – for the damage you cause to the other car.
PLPD insurance coverage comes into effect and pays for the repair of the other vehicle, up to the policy limits. It will also help pay for the medical costs of others. Know that PLPD insurance coverage will not pay for any damage to your vehicle or injuries to you.
What are the minimum insurance requirements for PLPD?
Policy limits refer to the total amount of money the insurance company will pay for a claim. In many states, PLPD limits begin with “20/40/10.” In other words, the state requires that you carry at least:
- $20,000 bodily injury coverage per person
- Coverage of up to $40,000 for bodily injury per accident
- and $10,000 to cover property damage
Now, these are only the minimum requirements set by some states. Many drivers feel more comfortable carrying more PLPD insurance coverage. This is because medical care and vehicle repairs are very expensive!
Increasing costs for vehicles and medical care
Imagine, for example, no stop sign while traveling at 65 mph. you collide with 2023 Dodge Challenger Final Edition in the amount of $100,000 and in total. More importantly, you seriously injure four passengers inside, and one of them dies from his injuries.
You will be responsible for:
- The value of the vehicle exceeds your insurance limits, $90,000
- Medical costs for all passengers are outside your insurance limits
- In some states, funeral costs for a deceased passenger can be $20,000 or more
Furthermore, you can still be sued beyond these amounts. The other driver could sue you for other expenses, such as caring for a child during physical therapy, or emotional damages for the loss of a family member.
A wreck like this could end up costing hundreds of thousands of dollars! This is why individuals with large assets—a home, investment properties, collectible cars, even cryptocurrency—usually purchase more liability coverage than their state requires. They rest easy knowing they will not need to sell these assets to pay for an accident.
And we didn’t even think about the damage to your vehicle or the injuries you sustained.
PLPD auto insurance vs. full coverage auto insurance
Think of PLPD insurance as the minimum liability coverage you must maintain in order to drive legally. It is there to protect you financially when you harm others or damage their property.
Full coverage insurance will include PLPD, but it includes more coverage to protect your investment in the vehicle. In addition to your liability, full coverage includes collision coverage—when you hit anything, your car will be repaired—and comprehensive coverage, which pays for things like theft or hail damage.
Check out the table below to get a better understanding of PLPD vs. full coverage insurance in real-world situations.
|You hit a fence||It pays to fix the fence up to the policy limits||Repairs to your car after you pay a deductible
Injuries to you (if not covered by your health insurance)
|I hit a pedestrian||Covers their Medicare, up to the policy limits||It pays for any damage to your car, after you pay a deductible|
|A tree limb fell on your car||X||It pays to fix your car, after you pay a deductible.|
|Your car is stolen||X||Pays you (or the lien holder) the value of the car if it is not found, minus it.
If your vehicle is found, repairs will be covered after the deductible has been paid
|You hit a car and injure a family of five||Medical care up to the limits of the policy
· Damage to their car up to the limits of the policy
|Get your car fixed, after you pay a deductible|
|Hailstorm damages the paint||X||You will pay for the new paint, after you pay a deductible|
You will notice that full coverage insurance begins after the insured has paid for discount. This is a predetermined amount of money that the insured individual is responsible for paying. In 2023, deductions range from $250 to $5,000, but many drivers feel more comfortable agreeing to pay $500 to $1,000 after an accident.
Note that your franchisor may also have a set dollar amount included in their contract, and you must stick to it. We’ll talk more about franchisees in a moment.
Why does PLPD insurance not have a deductible?
The purpose of a PLPD is to protect your assets, ensure that other parties get the medical care they need, and compensate them for property damage. In insurance, indemnity means to make someone financially sound after a (covered) loss.
Because the PLPD is there to prevent you from paying for those losses, it does not include a deductible.
Some cases are not covered by PLPD or full coverage
Cars are expensive, heavy, dangerous and fast. They also have sensitive parts and consumable equipment. PLPD insurance never covers:
- Your broken front eyebrows
- Standard maintenance, such as an oil change or tire replacement
- Consumable parts that wear out, such as tires or windshield wipers
Full coverage auto insurance may include glass coverage for your windshield, or it may be available as an add-on, called an “endorsement” or “rider,” to your policy.
With all of this in mind, the next question we hear a lot is, “Should I buy PLPD or full coverage insurance?” And like everything related to insurance, the answer is: It’s complicated!
“Should I buy full coverage auto insurance or the state minimum/PLPD insurance?”
All types of car insurance exist to protect you financially. But everyone goes through hard times once in a while, and full coverage auto insurance can be prohibitively expensive, especially for drivers inexperienced with faster cars, and insecure drivers with a history of accidents, tickets, and DUIs.
First thing’s first, however, you may not have a choice in the matter. If you have a new car, or if there is a lien on your car, the lien holder — the financial institution — will usually require that you carry full coverage.
This makes sense, because when you make payments on a car loan, the car already belongs to the bank. If this car is stolen or it is completely collected, the bank needs to know that it will be compensated for the loss, that is, it will be fully compensated financially.
“I completely own my car. Should I buy PLPD or full coverage?”
The answer to this question is also accurate. In many states, PLPD insurance coverage is the minimum you need to drive legally.
If you own multiple vehicles, and the vehicle in question is a $1,200 “old beater,” you may feel it’s not worth paying for full coverage. That’s because your annual costs of insuring that car are probably more than it’s worth. And you’ll still need to pay a deductible to get it fixed. Additionally, your insurance company may “finish” this car after a seemingly minor wreck, because it can cost more to repair minor damage than writing a $1,200 check.
Or maybe you paid cash for a $40,000 car. In this case, you must purchase full coverage insurance. Otherwise, you will lose $40,000 if it is stolen or broken.
For many consumers, the reality lies somewhere between these two extremes. Your car may have been paid for, but it’s worth $8,000, and it’s the only car you own. In this case, we strongly suggest keeping full coverage insurance. That way, if your car is fully charged, you’ll get a check from the insurance company for $8,000, which is a nice down payment on a new ride.
PLPD Limits: How Much Insurance Do You Need?
Health care costs, vehicle repair costs, and the prices of new and used cars have all risen in the United States since the COVID-19 pandemic, and it’s no secret. Inflation was hitting American consumers hard, too.
This means that US dollars have less spending power than they did before, and $10,000 worth of medical liability coverage isn’t all that great. And basic PLPD coverage limits like “20/40/10” may not be enough coverage anymore.
We’ll use another little story to explain it.
The time Judy was hit by a car in the grocery store parking lot
Imagine an old woman, Judy, doing her routine grocery shopping. She is 75 years old and a frail little lady. While returning to her car with a cart of groceries, a parked car quickly reverses and hits Judy. They are being dropped and groceries are flying everywhere!
Judy is awake, but in terrible pain because her hip is broken. Bystanders call 911, and the offending driver is smart enough to stay on site.
An ambulance arrived and Judy was taken to the local emergency room. She was admitted quickly and underwent a lot of tests and treatments over the coming weeks. While in the hospital, she contracted pneumonia, which is common among the elderly in the hospital, but everything went well and she returned home eight weeks after the accident.
In the end, Judy’s medical costs total $26,000. They include:
- $8,000 for an ambulance
- $4,000 for emergency room treatments
- $10,000 for an extended stay in the hospital
- $2,000 for medication
- $2,000 for medical devices, casts, crutches, etc
Now, Jodi has Medicare insurance for seniors, so her hospital expenses are covered. But your insurance company and Medicare will compete and decide which policy pays for each service.
After the injury, who pays the car insurance?
This is another difficult question without an easy answer. Each state — and some counties and municipalities — has specific laws about who is at fault, and there are no “fault” cases. So, every accident is unique. In the end, it boils down to your state’s at-fault laws, insurance laws, and the details of your accident.
Regardless, many consumers choose to purchase more liability coverage, because it offers greater protection for your assets in the event of causing injury, death, or damage to others. The good news is that higher coverage limits for PLPD are generally more affordable. So go ahead and splurge if it helps you sleep better at night knowing you won’t lose your home after an accident.
How to Shop for PLPD Insurance (And Why)
Car insurance companies increase their rates over time, even for drivers who are very safe with no claims. You can probably save money on PLPD coverage by shopping around every year or two. The savings may only amount to a few dollars a month, but in this economy, every penny helps!
To purchase a PLPD online, you will need to have some information handy. Collecting:
- Your Vehicle Identification Numbers (VIN)
- your driver’s licence
- and your current insurance policy, so you know current coverages and costs
Then do an internet search for “PLPD in [your state]. Hundreds of thousands of options will likely appear. Enter your information on a few sites and wait for insurance agents to contact you.