Personal Liability and Property Damage (PLPD) insurance coverage is required in some states to drive a vehicle, legally. Every state has unique laws requiring the amount of liability coverage you must carry and may use different terms to describe it.
Note the term “PLPD Insurance” was used mostly in Michigan at one time, but that phrase is out of date. MI insurance laws changed as of 2020. PLPD no longer describes your minimum requirements for Michigan drivers. MI drivers must carry “no fault insurance,” which covers more medical care for yourself and others.
For residents of other states, you can learn about your minimum auto insurance requirements by speaking to a local insurance agent or checking with your state’s Department of Motor Vehicles (DMV.)
PLPD Insurance for Consumers
This article aims to explain PLPD insurance for consumers who own private vehicles. Commercial auto policies, fleet auto policies and trucker insurance policies will have different liability insurance requirements, depending on your state, annual mileage, driver history and freight type.
To understand PLPD coverage, one must first understand the notion of liability.
What is Liability?
In short, liability means responsibility.
Imagine causing a little fender bender in a residential neighborhood. You’re travelling along at 25 mph looking for an address and accidentally rear-end a car because you didn’t see a stop sign in time. Thankfully, no one gets hurt, but both vehicles suffer minor damage. You are the “at fault” driver, and you are liable — responsible — for the damage you cause to the other vehicle.
PLPD insurance coverage comes into play and pays to repair the other vehicle, up to policy limits. It would also help pay medical costs for others. Know that PLPD insurance coverage will not pay for any damage to your vehicle, nor injuries to yourself.
What Are the Minimum Requirements for PLPD Insurance?
The phrase “policy limits” refers to the total amount of money an insurance company will pay for a claim. In many states, PLPD limits start at “20/40/10.” In other words, the state requires that you carry at least:
- $20,000 bodily injury coverage per person
- Up to $40,000 bodily injury coverage per accident
- And $10,000 of property damage coverage
Now, those are only the minimum requirements set forth by some states. Many drivers feel more comfortable carrying more PLPD insurance coverage. That’s because medical care and vehicle repairs are expensive!
The Increasing Costs of Vehicles and Medical Care
Imagine, for instance, missing a stop sign while travelling 65 mph. You crash into a 2023 Dodge Challenger Final Edition valued at $100,000 and total it. More importantly, you cause serious injuries to four passengers inside, and one of them passes away from their injuries.
You will be liable for:
- The value of the vehicle beyond your insurance limits, $90,000
- The costs of medical care for all passengers beyond your insurance limits
- And, in some states, funeral costs for the deceased passenger, which could be $20,000 or more
Furthermore, you could still get sued beyond those amounts. The other driver can sue you for other expenses, like child care while they’re in physical therapy, or emotional damages for losing a family member.
A wreck like that could ultimately cost hundreds of thousands of dollars! That’s why individuals with significant assets — a home, investment properties, collectible autos, even cryptocurrency — usually buy more liability coverage than their state demands. They rest easier knowing they won’t need to sell those assets to pay for an accident.
And we haven’t even thought about damage to your vehicle or injuries to yourself.
PLPD Auto Insurance vs. Full Coverage Auto Insurance
Think of PLPD insurance as the bare minimum of liability coverage you must maintain to drive legally. It exists to protect you financially when you injure others or damage their property.
Full coverage insurance will include PLPD, but it includes more coverage to protect your investment in a vehicle. In addition to your liability, full coverage includes collision coverage — when you crash into anything, your car will be fixed — and comprehensive coverage, which pays for things like theft or hail damage.
Check out the table below for a better understanding of PLPD vs full coverage insurance in real-world situations.
|You crash into a fence
|Pays to repair the fence up to policy limits
|· Repairs to your vehicle, after you pay a deductible
· Injuries to yourself (if not covered by your health insurance)
|You hit a pedestrian
|Covers their medical care, up to policy limits
|Pays for any damage to your car, after you pay a deductible
|A tree limb falls on your car
|Pays to repair your car, after you pay a deductible.
|Your car is stolen
|· Pays you (or the lienholder) the value of the car if it’s not found, less a deductible.
· If your vehicle is found, repairs are covered after you pay the deductible
|You strike a vehicle and injure a family of five
|· Medical care up to policy limits
· Damage to their vehicle up to policy limits
|Repairs your vehicle, after you pay a deductible
|A hailstorm damages the paint
|Will pay for new paint, after you pay a deductible
You’ll notice that full coverage insurance kicks in after the insured pays a deductible. That’s a predetermined amount of money that the insured individual is responsible to pay. In 2023, deductibles range from $250 to $5,000, but many drivers feel most comfortable agreeing to pay $500 to $1,000 after a wreck.
Note that your lienholder may also have a specific dollar amount included in their contract, and you must abide by it. We’ll talk more about lienholders in a moment.
Why Doesn’t PLPD Insurance Have a Deductible?
The purpose of PLPD is to protect your assets, ensure other parties get the medical care they need, and to indemnify them for damage to property. In insurance-speak, to indemnify means to be make someone financially whole after a (covered) loss.
Since PLPD exists to keep you from paying for those losses, it doesn’t include a deductible.
Some Situations AREN’T Covered by PLPD or Full Coverage
Automobiles are expensive, heavy, dangerous and fast. They also have delicate parts and consumable equipment. PLPD insurance never covers:
- Your broken windshields
- Standard maintenance, like oil changes or tire replacements
- Consumable parts that wear out, like tires or windshield wipers
Full coverage auto insurance may include glass coverage for your windshield, or it might be available as an extra add-on, called an “endorsement” or a “rider” to your policy.
With all that in mind, the next question we hear often is, “Should I buy PLPD or full coverage insurance?” And like everything insurance-related, the answer is: it’s complicated!
“Should I buy Full Coverage Auto Insurance or the State Minimum / PLPD Insurance?”
All types of auto insurance exist to protect YOU financially. But everyone falls on hard times once in a while, and full coverage auto insurance can be incredibly expensive, especially for inexperienced drivers in faster cars, and unsafe drivers with a record of accidents, tickets and DUI.
First thing 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 vehicle, the lienholder — the financial institution — will usually require that you carry full coverage.
This makes sense, because when you’re making payments on an auto loan, the vehicle actually belongs to the bank. If that car gets stolen or totaled, the bank needs to know they will be indemnified for the loss, that is, made whole financially.
“I Own My Car Outright. Should I Buy PLPD or Full Coverage?”
The answer to this question is nuanced as well. In many states, PLPD insurance coverage is the bare minimum of what you need to drive legally.
If you own several vehicles, and the car in question is an “old beater” worth $1,200, you may feel it’s not worth paying for full coverage. That’s because your annual costs to insure that car are likely higher than its value. And you’ll still need to pay a deductible to have it repaired. Plus, your insurer might “total out” this vehicle after a seemingly minor wreck, because it may cost more to repair minor damage than write you a check for $1,200.
Or, perhaps you paid cash for a $40,000 car. In that case, you should absolutely buy full coverage insurance. Otherwise, you’ll take a loss of $40,000 if it gets stolen or wrecked.
For many consumers, the reality lies somewhere between those two extremes. Perhaps your car is paid for, but its worth $8,000, and it’s the only vehicle you own. In that case, we would strongly suggest you keep full coverage insurance. That way, if your car is totaled out, you’ll get a check from the insurer for $8,000, which is a nice down payment on a new ride.
PLPD Limits: How Much Insurance Do You Need?
Healthcare costs, vehicle repair costs, and new and used vehicle prices have skyrocketed in the US since the COVID-19 pandemic, it’s no secret. Inflation has been hitting US consumers hard, too.
That means our US dollars have less spending power than they once did, and $10,000 of liability coverage for medical costs isn’t very much. And basic PLPD coverage limits like “20/40/10” might not be enough coverage anymore.
We’ll use another little story to explain.
The Time Judy Got Hit by a Car in the Grocery Store Parking Lot
Imagine an elderly woman, Judy, doing her routine grocery shopping. She’s 75, and a frail little lady. While heading back to her car with a cart of groceries, a parked vehicle backs up quickly and hits Judy. She gets knocked down and the groceries fly everywhere!
Judy’s awake, but in terrible pain because her hip is broken. Passersby call 911, and the offending driver is smart enough to stay at the location.
The ambulance arrives and Judy is whisked away to the local emergency room. She’s admitted quickly and undergoes lots of tests and treatments over the upcoming weeks. While in the hospital, she gets pneumonia, which is common among hospitalized seniors, but everything works out and she heads home eight weeks after the accident.
Ultimately, Judy’s medical costs total $26,000. They include:
- $8,000 for the ambulance
- $4,000 for emergency room treatments
- $10,000 for an extended hospital stay
- $2,000 for medications
- $2,000 for medical devices, casts, crutches and so on
Now, Judy has Medicare insurance for seniors, so her hospital expenses are covered. But your insurance company and Medicare will go head to head and decide which policy pays for each service.
After an Injury, Whose Auto Insurance Pays?
This is another challenging question with no easy answer. Every state — and some counties and municipalities — have specific laws about who is at fault, and there are “no fault” states. Then, every accident is unique. Ultimately, it boils down to your state laws about fault, insurance laws, and the specifics of your incident.
Regardless, many consumers choose to buy more liability coverage, because it’s more protection for your assets should you cause an injury, death or damage to others. And the good news is that higher coverage limits for PLPD are generally affordable. So go ahead and splurge if it helps you sleep better at night knowing you won’t lose your house after an accident.
How to Shop Around for PLPD Insurance (and Why)
Auto insurance companies creep up their prices over time, even for very safe drivers with no claims. You can probably save money on PLPD coverage by shopping around every year or two. The savings may only equal a few dollars a month, but in this economy, every penny helps!
To shop for PLPD online, you’ll need some information handy. Gather up:
- Your Vehicle Identification Numbers (VIN)
- Your driver’s license
- And your current policy, so you’ll know your current coverages and costs
Then do an internet search for “PLPD in [your state]. Chances are that hundreds of thousands of options will appear. Plug in your information in a few websites and wait for insurance agents to contact you.