Liability vs. Full Coverage Car Insurance

When it comes to liability versus full coverage car insurance, most states require only a minimum amount of liability insurance, with the collision and comprehensive portions of full coverage being optional. Your lender may require you to get full coverage when leasing, but the benefits of covering car repair costs after damage from various perils or an accident can make the additional cost of this insurance option worthwhile.

Learn more about the differences between these two auto insurance coverage options, including average costs and what you’re covered against.

On This Page

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  What Is Liability Coverage?

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  What Is Full Coverage?

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  Liability vs. Full Coverage: Cost by State

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  Full Coverage vs. Liability: Which Is Better?

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  FAQs

What Is Liability Coverage?

Liability coverage provides two types of liability protection when you are responsible for a car accident:^[1]

• Bodily injury liability: Pays for the medical expenses, loss of income and funeral costs of injured or deceased parties, including other drivers and pedestrians.
• Property damage liability: Pays for the victim’s property damage after an accident, such as car repair bills.

Liability coverage will also cover your legal expenses if the victims of a car accident sue you for compensation.

What Isn't Covered Under Liability-Only Coverage?

Only the losses of other drivers, their passengers or other people’s property are covered by liability insurance. Any other form of coverage would require purchasing additional policies. For example, to cover the costs of your own injuries and physical damage to your vehicle after an accident, you would likely need to also purchase medical payments coverage (MedPay) and collision coverage.

Is Liability Coverage Required?

Most states and the District of Columbia require a minimum amount of liability coverage. New Hampshire is the only exception, where you can opt out of liability coverage by providing proof of financial responsibility capability should you get into an accident.^[2] The amount of liability coverage, consisting of bodily injury per person, bodily injury per accident and property damage per accident coverage, you’ll need will depend on state laws.

Below is the respective amount of each liability coverage you’ll need, depending on the state you live in. Minimum liability requirements are given in an A/B/C split limits format where A represents the bodily injury liability limit for any one person injured in an accident; B represents the total bodily injury liability limit for everyone injured in an accident; and C represents the property damage liability limit. Number totals refer to thousands of dollars of coverage, so a 25/50/20 split limits requirement equals $25,000, $50,000, and $20,000, respectively.^[3]

What Is Full Coverage?

Full coverage includes the minimum amount of coverage needed to meet your state’s insurance requirements, plus comprehensive and collision coverage. These additional protections cover you when your car collides with another car or object or for losses unrelated to a collision, like theft or fire damage, even when the accident is your fault.

Additional coverages will vary by state but may include uninsured/underinsured motorist coverage (UM/UIM), medical payments coverage (MedPay) and personal injury protection (PIP).

There is no state law requiring drivers to carry full coverage. However, if you are financing or leasing your car, your lender will likely require you to maintain full coverage until the loan is fully repaid.^[4]

What's Covered by Comprehensive Coverage?

Comprehensive coverage will pay for your losses if they were caused by an incident other than a collision. Covered losses will generally include:^[5]

• Fire
• Hail
• Windstorms
• Floods
• Earthquakes
• Theft
• Vandalism
• Civil disturbance
• Falling objects
• Collision with an animal

What's Covered by Collision Coverage?

Collision insurance helps cover the costs to repair or replace your vehicle when it is damaged by:^[6]

• Accidents with other vehicles
• Collisions with stationary objects, such as guardrails, telephone poles or mailboxes
• Single-vehicle rollovers

What Isn't Covered Under Full Coverage?

Despite being called “full” coverage, this car insurance option won’t protect you from everything. While exclusions will vary by state requirements, some expenses won’t be covered without additional coverage options, if they’re available. Some of these exclusions can include:

• Accidents caused while using your car for business purposes, like rideshare or delivery services
• Typical wear and tear
• Intentional damage to your car
• Damage to personal property left in your vehicle, which would typically be covered by your home or renters insurance
• Repairs to or damage caused by custom equipment or modified parts

Liability vs. Full Coverage: Cost by State

The national average annual cost of minimum liability car insurance is $820. In comparison, full coverage insurance costs, on average, $2,697 annually. However, factors such as your age, driving record, vehicle type and where you live can influence your rates, so premiums may vary from person to person. Below, we’ll break down the average annual cost for both insurance options by state for a 40-year-old with a good driving record.^[7]

Full Coverage vs. Liability: Which Is Better?

The value of full coverage versus liability coverage will depend on the value of your car after depreciation and how quickly you pay off your car loan. If you are financing your car, then your lender will likely require you to maintain full coverage (and sometimes gap insurance) until you repay the loan.^[4] You could then consider dropping full coverage once your loan is fully paid off.

The cost of repairs and replacement parts is another factor to consider when deciding between these insurance options. For example, if you’d face high out-of-pocket repair costs due to expensive replacement parts if your car is damaged, then it may be worth maintaining full coverage.

Liability-only coverage may be a better option if you want to pay a cheaper premium and don’t mind fewer coverages. However, dropping full coverage means you’d have to pay out of pocket for collision- and comprehensive-type claims.

Do You Need Both Comprehensive and Collision Coverage?

Don’t think that comprehensive and collision coverage are always bundled — you can drop one and keep the other to help cut down on costs, provided they’re not required if leasing. For example, if you’re a safe driver with a clean driving record, collision coverage may not be essential. Alternatively, comprehensive coverage may not be crucial to have if your car is garaged and you live in a safe neighborhood where theft and vandalism are rare.