Liability vs. full coverage auto insurance

Whether you’re shopping for a new car insurance policy or renewing your existing coverage, you’ll be asked to choose how much coverage you want. Liability? Full coverage? Understanding the difference is crucial, not only so you know how you are protected, but also so you can make an apples-to-apples comparison.

Keep reading to learn the difference between liability and full coverage, how much each one costs and when to switch from full coverage to liability.

Key highlights

• The liability portion of car insurance pays for claims made when you injure another person or damage their vehicle or other property in an accident.
• Full coverage protects against all types of losses and includes liability insurance plus property damage protection for your own vehicle.
• Liability is the only kind of car insurance required by state law.

What is liability car insurance?

Drivers are required to purchase liability car insurance in almost every state. The only exception is New Hampshire. Liability insurance is relatively inexpensive compared to full coverage. But it also is very limited.

“(It’s) just coverage if you injure someone or cause property damage,” says Erin Newell, an agent with Insurance Services Agency of Gun Lake, an independent insurance agency in Wayland, Michigan.

In other words, if you get in an accident and all you have is a liability policy, damage to your own vehicle and injuries sustained by yourself or your passengers will not be covered.

In most states, required liability coverage includes the following:

• Bodily injury liability
• Property damage liability

Liability coverage is expressed by three numbers, for example 50/100/50. In this case, it represents $50,000 in bodily injury coverage per person; $100,000 in bodily injury, per incident; and $50,000 in property damage coverage.

States also stipulate the minimum amount of liability coverage you must purchase. If you live in a state with no-fault insurance, you will also be expected to purchase personal injury protection, known as PIP. Other states may also require coverage for uninsured/underinsured motorist protection.

How much does liability car insurance cost?

The cost for liability car insurance can vary depending on factors such as your state’s required minimums and your claims history.

“Liability-only is obviously going to be your cheapest coverage,” Newell says.

Our review of premiums for state minimum liability coverage shows these plans cost an average of $503 per year nationwide. The cheapest average cost can be found in Wyoming at $288 while Floridians pay the most, shelling out an average of $993 annually for their state’s minimum required coverage.

Who should buy liability car insurance?

With the exception of New Hampshire, residents of every state in the U.S. are required by law to purchase some level of liability car insurance in order to drive legally on the road. However, you may want to purchase more than your state minimum requirements, which are relatively low. If you do get into a serious accident and cause an injury or damage, the amount could be in excess of your coverage limits. In that case, the other party could take legal action against you to recoup the remaining costs.

What is full coverage car insurance?

Full coverage car insurance doesn’t refer to a specific type of policy but is a term used to signify that someone is insured for both liability and damage to their own vehicle. It typically includes the following components:

• Liability covers both bodily injury and property damage liability
• Comprehensive covers losses caused by things outside your control, such as natural disasters or theft
• Collision covers losses incurred when your vehicle hits another vehicle or object

Other components of full coverage may include roadside assistance, gap insurance for when you owe a lender more than your car is worth, or uninsured/underinsured motorist coverage for if you get into an accident with someone who doesn’t have liability coverage.

How much does full coverage car insurance cost?

Full coverage is significantly more expensive than a liability-only policy because it includes both comprehensive and collision coverage, as well as significantly higher liability coverage limits. We estimate the total cost of full coverage to be an average of $1,897 nationwide. But like liability-only coverage, costs can vary significantly from state to state.

The cheapest state for full coverage, according to our analysis, is Vermont. Premiums there average $1,319 per year. The most expensive state is Louisiana at an average of $2,883 annually.

Who should buy full coverage car insurance?

Not everyone needs to purchase full coverage for their vehicle. Comprehensive and collision coverage isn’t required by law, although if you finance your car, the lender may require you to carry full coverage until your loan is paid off.

“If my vehicle was a total loss tomorrow, could I afford to replace it?” Newell says people should ask themselves. If the answer is no, then buying full coverage might be a smart decision.

When comparing liability, comprehensive and full coverage insurance, also consider the value of your car. If you have an older vehicle, the amount an insurer will pay after factoring in your deductible may be so low that it doesn’t make financial sense to pay higher premiums for comprehensive or collision coverage.

How much does liability and full coverage car insurance cost?

The rates below were collected from auto insurance comparison site CarInsurance.com and its data partner Quadrant Information Services for single, 40-year-old male and female drivers of a 2023 Honda Accord LX with a good insurance score and no violations on their record for the following: state minimum liability insurance, standard liability with coverage limits of 50/100/500, and full coverage with liability limits of 100/300/100 and a $500 comprehensive and collision deductible.

How much is liability and full coverage car insurance in each state?

Liability car insurance is considerably cheaper than full coverage because it is far more limited. Still, prices for both can vary considerably among states. Take a look at the chart below to see how the numbers stack up in your state.

Liability vs full coverage: How to decide

Unsure of how much coverage you may need? Consider the following factors:

• Personal savings. Do you have significant cash reserves? If not, full coverage can help ensure you’ll be able to repair your car or replace it in the event it is totaled.
• Risk: If you live in an area prone to natural disasters or crime, having full coverage might be a smart move.
• Vehicle value. Spending hundreds – or even thousands – more for full coverage may not make sense if you have an older vehicle that isn’t worth much.
• Premiums. On the other hand, you may find that full coverage doesn’t cost much more than liability-only coverage in your state. In that case, maybe it’s worth paying a little more for the peace of mind you get from having comprehensive and collision insurance.
• Deductibles. If you do decide to go with full coverage, you’ll also have to select deductibles for your comprehensive and collision coverage. This is the amount you need to pay out of pocket when making a claim so be sure you have enough in the bank to cover the expense.

Most, but not all, drivers have the option of buying full coverage. The exceptions can include owners of historical vehicles, those without a VIN and certain cars prone to theft. The latter is a reason why some insurers, among them State Farm and Progressive, have declined to issue policies for certain Kia and Hyundai vehicles.

“A lot of Kias are not being insured because of all these thefts,” Newell says, referencing a spate of crimes spurred by a wave of social media videos in the past couple years showing how to steal Kia vehicles.

Frequently asked questions

How much cheaper is liability than full coverage insurance?

In many states, you can save as much as $1,000 to $1,500 per year or more if you opt for liability-only insurance instead of full coverage, based on our analysis of rates. But keep in mind that if you are in an accident and have liability-only insurance, your policy will not pay anything to repair or replace your vehicle.

Can I switch from full coverage to liability insurance at any time?

Yes, most insurers will let you update your policy details and type of coverage at any time. Speak with your local agent or a company representative to request an update to your plan.

When should I switch from full coverage to liability only?

Once you have paid off your car, you can switch at any time you’d like. A common rule of thumb is that once the cost of comprehensive and collision insurance exceeds 10% of the value of your car, that’s a good time to drop full coverage.

However, if you don’t have enough savings to repair or replace your vehicle after an accident, it may make sense to keep paying for full coverage even after premiums exceed that 10% threshold. Bear in mind that if you still have a loan balance on your vehicle, your lender will probably require you to carry full coverage.

Resources & methodology

Sources

• “Dealers still sell Hyundais and Kias vulnerable to theft, but insurance is hard to get” Accessed August 2024
• Chandler Ross Law. “Who Pays the Damages that Exceed Policy Limits” Accessed August 2024
• Insurance Information Institute. “Auto Insurance Basics”, Accessed August 2024
• Insurance Information Institute. “Automobile Financial Responsibility Laws by State” Accessed August 2024
• Liberty Mutual. “Full Coverage” Car Insurance Accessed August 2024
• Interview with Erin Newell, an agent with Insurance Services Agency of Gun Lake in Wayland, Michigan.

Methodology

Rates were collected from auto insurance comparison site CarInsurance.com and its data partner Quadrant Information Services for single, 40-year-old male and female drivers of a 2023 Honda Accord LX with a good insurance score and no violations on their record for the following: state minimum liability insurance, standard liability with coverage limits of 50/100/500, and full coverage with liability limits of 100/300/100 and a $500 comprehensive and collision deductible.

We analyzed more than 53 million quotes, more than 34,000 ZIP codes and 170 insurance companies nationwide.

Note: 100/300/100 means up to $100,000 for the medical bills of those you injure, up to $300,000 per accident for bodily injury liability for all persons injured in one accident, and $100,000 to repair other drivers’ cars and property that you damage.