Liability vs. full coverage: which car insurance do you need?

Liability vs. full coverage: which car insurance do you need?

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Liability car insurance is required in just about every state, but a full coverage policy is usually optional. Understanding the difference between liability vs. full coverage car insurance can help you make the best decision for your budget and your vehicle.

In this article, we’ll explain what the terms “liability” and “full coverage” mean when it comes to car insurance. We’ll also review the differences in coverage and cost between the two policies. If you’re ready to purchase an auto insurance policy, consider getting quotes from a few of the best car insurance companies on the market. You can compare prices from top-rated insurers using the free tool below.

In this article:

  • What is liability car insurance?

  • What is full coverage car insurance?

  • Liability vs. full coverage insurance: cost

  • Do you need full coverage car insurance?

  • Our recommendations for car insurance

  • FAQ: liability vs. full coverage

  • Our methodology

What is liability car insurance?

Liability car insurance is typically divided into two types of coverage: bodily injury liability and property damage liability. Both types of coverage pay for another driver’s expenses after an accident you are found at fault for.

  • Bodily injury liability: This type of liability coverage pays for expenses such as medical bills, lost wages, and pain and suffering compensation.

  • Property damage liability: This coverage pays for expenses such as vehicle repair costs and damage to buildings or fences.

Liability car insurance policies do not cover an unlimited amount of damage. When you purchase liability car insurance, your policy will include coverage limits described by three numbers. For example, the minimum required liability car insurance in California is 15/30/5.

These numbers represent the following:

  • A maximum of $15,000 is paid for bodily injury liability per person per accident

  • A maximum of $30,000 is paid for bodily injury liability total per accident

  • A maximum of $5,000 is paid to cover property damage liability per accident

Minimum requirements vary by state, but you can always purchase higher-limit policies than your state minimum. If your insurance policy fails to cover the full costs associated with an accident that you cause, you can be sued in civil court to make up the difference.

What is full coverage car insurance?

“Full coverage” is a term used to describe a car insurance policy that includes liability coverage as well as comprehensive and collision coverage. A full coverage insurance policy might also include medical coverage and uninsured/underinsured motorist coverage (UM/UIM).

Here’s what each of these types of insurance includes:

  • Collision insurance: This policy pays for the cost of damages to your vehicle after an accident. It includes collisions with other vehicles and road hazards. Collision coverage does not include accidents involving animals.

  • Comprehensive insurance: Comprehensive coverage pays for damages to your vehicle that are caused by an animal, natural disaster, theft or vandalism.

  • Medical payments (MedPay): This pays for expenses such as medical bills and lost wages for you and your passengers.

  • Personal injury protection (PIP): This pays for medical bills for you and your passengers and is mostly used in no-fault states.

  • Uninsured/underinsured motorist coverage: If you are in an accident where the other driver is at fault and is uninsured, this coverage will cover related property damage and medical costs. It may also make up the difference if the other driver is insured but their policy does not fully cover the cost of damages.

Full coverage car insurance is not required by law in any state. However, if you finance or lease your vehicle, your lender may require that you maintain full coverage car insurance as part of the lease/loan agreement.

Liability Auto Insurance

Comprehensive and Collision Auto Insurance

Required by Law?

Yes, in most states

No

What’s Covered?

Personal injury and property damage for other drivers after an accident that you cause

Damages to your own vehicle

Deductible

No deductible required

Set by insurer, usually between $500 and $1,500

Policy Limits

Variable and chosen at time of purchase

Actual cash value (ACV) of your vehicle

Liability vs. full coverage insurance: cost

The cost of your insurance policy is determined by a number of factors, including your age, vehicle, driving record, state and city. Because a full coverage policy includes liability insurance, it is cheaper to purchase only liability vs. full coverage. However, adding comprehensive and collision policies to your liability policy can be relatively inexpensive.

The chart below shows average policy costs for liability vs. full coverage insurance by state. The data comes from a 2020 report issued by the National Association of Insurance Commissioners (NAIC). This report reflects consumer cost data from 2017.

State

Average Liability Premium

Average Combined Premium (Liability, Comprehensive and Collision)

Alabama

$478.68

$1,014.70

Alaska

$561.06

$1,072.19

Arizona

$607.66

$1,125.54

Arkansas

$458.33

$1,039.10

California

$565.70

$1,115.73

Colorado

$639.99

$1,194.70

Connecticut

$743.61

$1,276.02

Delaware

$843.98

$1,321.54

District of Columbia

$744.18

$1,466.27

Florida

$964.28

$1,445.57

Georgia

$735.15

$1,286.49

Hawaii

$468.99

$918.13

Idaho

$403.37

$780.46

Illinois

$507.40

$976.73

Indiana

$432.08

$840.43

Iowa

$339.12

$795.10

Kansas

$399.96

$947.54

Kentucky

$585.99

$1,043.82

Louisiana

$936.94

$1,637.57

Maine

$370.18

$764.94

Maryland

$700.58

$1,256.49

Massachusetts

$642.92

$1,215.18

Michigan

$873.73

$1,494.03

Minnesota

$483.93

$939.01

Mississippi

$511.45

$1,105.92

Missouri

$492.63

$1,002.67

Montana

$423.03

$696.19

Nebraska

$417.32

$934.30

Nevada

$798.52

$1,258.79

New Hampshire

$425.84

$861.19

New Jersey

$932.43

$1,464.74

New Mexico

$548.33

$1,050.73

New York

$869.13

$1,485.58

North Carolina

$371.51

$838.61

North Dakota

$303.66

$808.90

Ohio

$438.68

$864.64

Oklahoma

$502.71

$1,100.90

Oregon

$677.07

$1,043.93

Pennsylvania

$539.44

$1,065.44

Rhode Island

$869.96

$1,467.02

South Carolina

$645.39

$1,145.15

South Dakota

$327.34

$872.40

Tennessee

$456.05

$957.28

Texas

$631.22

$1,295.53

Utah

$568.07

$984.12

Vermont

$375.02

$842.36

Virginia

$468.79

$920.40

Washington

$666.72

$1,077.65

West Virginia

$513.12

$1.072.14

Wisconsin

$412.46

$804.81

Wyoming

$354.35

$935.76

Do you need full coverage car insurance?

Liability insurance is required in most states, but full coverage insurance is not. While a full coverage policy is a good idea for many drivers, it’s not always worth it. Largely, whether you should purchase liability vs. full coverage depends on your finances and the value of your vehicle.

Reasons to purchase full coverage car insurance:

  • Your vehicle is leased or financed

  • You have a new vehicle (less than 10 years old)

  • You can’t afford to replace your vehicle out of pocket if it is destroyed in an accident or act of nature

Comprehensive and collision insurance policies typically cover what is known as the actual cash value of your car. That is, it will pay out up to the total amount that your car was worth before it was destroyed. In some cases, your car’s ACV may be less than the total cost of auto repairs.

As your vehicle ages, its value drops. The general rule of thumb is that once your car is more than 10 years old, it is not worth purchasing full coverage insurance. However, if you have a luxury vehicle, it may be worth insuring beyond 10 years.

To decide if you should purchase full coverage insurance, calculate the value of your vehicle and compare this amount against your expected premiums. A good tool for calculating your car’s value is Kelley Blue Book. If the amount you spend on your annual premiums isn’t much less than your car’s value, you may want to skip full coverage.

Our recommendations for car insurance

Whatever your auto insurance needs, it’s a good idea to compare car insurance quotes from multiple providers before you purchase a policy. There is no single best insurer for every driver, so comparing liability vs. full coverage quotes from multiple options is the best way to find the lowest price.

Use the tool below to compare free, personalized car insurance quotes from some of the top insurers in the industry. Or, read on to learn more about two of our recommended providers: Geico and Progressive.

Geico: Best Overall

Geico boasts an A++ financial strength rating from AM Best, an A+ rating from the Better Business Bureau (BBB) and a high ranking in every region in the J.D. Power 2020 U.S. Auto Insurance Satisfaction StudySM. For these reasons and more, we think it is one of the best options out there.

Geico policies are the most inexpensive option for many customers. This is partly due to Geico’s numerous car insurance discounts, which include a good driver discount (up to 26% off), multi-vehicle discount (up to 25% off) and good student discount (up to 15% off).

You can purchase liability coverage from Geico as well as every other standard type of insurance (collision, comprehensive, personal injury protection, medical payments, uninsured/underinsured motorist). Additionally, Geico offers:

  • Emergency roadside assistance

  • Rental reimbursement

  • Mechanical breakdown insurance (MBI)

  • Rideshare insurance

Progressive: Best for High-Risk Drivers

Progressive is a good option for high-risk drivers (those under 21, those over 65 or those that have a DUI/DWI on record). Our cost research indicates that Progressive often offers the lowest rates for these types of drivers.

Like Geico, Progressive has strong financial stability — the insurer is rated A+ for financial strength by AM Best. Minimum and full coverage insurance policies are available. In addition to the standard auto insurance options, Progressive offers policy add-ons for:

  • Roadside assistance

  • Rental car reimbursement

  • Loan/lease payoff

  • Custom parts and equipment coverage

  • Rideshare coverage

A useful feature offered by Progressive is the Name Your Price tool, which allows customers to sort through coverage options by starting with the premium they hope to pay.

FAQ: liability vs. full coverage

Should I get liability or full coverage car insurance?

Typically, it is advisable to purchase full coverage car insurance. Liability insurance will not pay for damages to your own vehicle after an accident where you are at fault. It will also not cover damages due to theft, vandalism or acts of nature. If you finance or lease your vehicle, you may even be required to maintain a full coverage insurance policy.

If your vehicle is not especially valuable, you may want to skip full coverage and opt for liability-only coverage. Calculate the value of your car and compare this with the cost of full coverage premiums to help decide which option is best for your car and your budget.

When should I switch from full coverage to liability?

As your vehicle ages, its value will depreciate. At a certain point, it may no longer be worth it to maintain a full coverage insurance policy. In general, 10 years is a good time to consider switching from full coverage to just liability. However, this depends on your particular vehicle.

What does liability-only coverage mean?

A liability-only car insurance policy pays for the cost of property damage and medical expenses for other parties after an accident you are found at fault for. Your liability coverage will not reimburse you for damages to your own vehicle or medical bills for yourself and your passengers.

Does liability insurance cover my car if someone hits me?

If someone else causes an accident involving your vehicle, your own liability insurance will not pay for damages. In this case, the at-fault driver’s liability policy should cover the cost of your property damages.

How much cheaper is liability vs. full coverage?

The difference in cost between liability vs. full coverage insurance depends on the state. In general, switching from liability-only to a full coverage policy could increase your annual premium between $400 and $800.

Our methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Reputation: Our research team considered market share, ratings from industry experts and years in business when giving this score.

  • Availability: Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.

  • Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.

  • Cost: Average auto insurance rates and discount opportunities were both taken into consideration.

  • Customer Experience: This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.