Liability Coverage and Damage to Property of Others - What is the Difference?

Someone asked me why they have $300,000 in liability coverage when they also have $1,000 in coverage for damage to property of others. Good question that requires a long answer, which I will now make short.

Liability coverage, or coverage E, provides that the insurance company will pay money you become legally obligated to pay as a result of causing injury or property damage to another. Huh? Okay, so if you hurt someone or damage their property, they are going to pay the injured person. For example, your dog bites someone? It is coverage E that pays it. Or, lets say you invite someone over and they fall into that hole in your backyard that you forgot to tell them about. Coverage E pays the damage.

The other coverage, damage to property of others, pays up to $1,000 (sometimes $500) when someone's property is damaged and you damaged it. So, you are throwing a baseball in the front yard and it gets over your 10 year old's head and hits a car windshield. You may not be legally liable, but you may want to be a good neighbor. This coverage will pay for that damage.

So, Coverage E pays for property damage or personal injury if you are legally liable. Damage to property of others pays only for property damage regardless of fault.

Clear? Don't worry if it is not. There are a lot of agents  and adjusters who do not understand the difference either.