Liability insurance protects you against the claims of other drivers for their injuries or damage to their vehicles in the event that you cause an accident, up to the limits of liability in your policy. Most states require that drivers have liability insurance up to certain minimum limits. Find out New York's minimum limits above.
Bodily Injury Liability Insurance
In most states, bodily injury coverage pays for claims related to injuries to other persons vehicles involved in an accident that you caused.
Example: You cause an accident with another driver who has three passengers in her car. If you have liability insurance, you are covered against any bodily injury claims filed by the driver or her three passengers up to the limits of your policy.
Property Damage Limit Liability Insurance
If you cause an accident, your liability insurance will cover property damage claims resulting from the accident up to the limits of your policy. Property damage includes damage to the other vehicle, as well as damage to other property such as buildings and telephone poles that might be damaged in the accident.
Example: Suppose you rear-end the driver in front of you at a stoplight. No one is hurt but there is damage to both cars.