Liability vs. Full-Coverage Car Insurance: What You Need to Know

Many people buy car insurance because their state requires it. But while liability insurance is a requirement in most states, full coverage is optional. Although not everyone needs full coverage, the added protection provides benefits to many drivers.

Here’s what you need to know about liability vs. full-coverage auto insurance to help you decide which coverage is best for you.

Key Takeaways:

• The national average monthly premium for liability-only coverage is $131, while full coverage costs $271.
• Although liability insurance is required, your state’s minimum liability limits won’t cover your injuries or damage to your vehicle.
• Full-coverage car insurance typically includes liability, comprehensive, and collision coverages and is often required if you have a car loan or lease.

The Cost of Liability vs. Full Coverage

When comparing the cost of liability vs. full-coverage insurance, you’ll see that a full-coverage policy costs more. The average full-coverage policy costs a little over double that of a similar liability-only plan, according to Compare.com data.

Full-coverage auto insurance is more expensive because it offers additional protection you won’t get with a liability-only policy, which we’ll explain in more detail below. But the difference can vary quite a bit from one company to the next.

The table below shows average rate differences between liability vs. full-coverage insurance policies from the nation’s largest insurers.

Farmers, State Farm, and Travelers have the smallest jumps in cost from liability to full-coverage policies, with State Farm only charging 87% more for full coverage. Progressive, GEICO, and Allstate have differences that are 21 to 49 percentage points higher than the difference in the national averages.

This is why comparing car insurance quotes from different companies with the same coverage limits is such a good idea.

What Does Liability-Only Car Insurance Cover?

Liability-only car insurance covers injury or damage you cause to others in an accident. Liability insurance consists of two coverages:

• Bodily injury liability: This coverage pays for medical bills and other related expenses if you cause injuries to another driver, their passengers, pedestrians, or bicyclists. It may also pay for your legal fees if you’re sued after an at-fault accident.
• Property damage liability: This coverage pays for property damage you cause in a covered car accident. It covers repairing or replacing property such as vehicles, buildings, utility poles, fences, mailboxes, or guardrails.

Your insurer pays up to your policy limit for each coverage. So if your liability limit is 50/100/50, your insurer pays up to $50,000 per person and $100,000 per accident for bodily injury, and $50,000 for property damage.

Pros of liability-only coverage

Buying liability-only coverage is cheaper than full-coverage car insurance. Unlike full coverage, liability insurance only covers the other party’s injuries and property damage. With full coverage, you also get financial protection for your vehicle.

Liability coverage also meets your state’s minimum insurance requirements. Although liability limit requirements vary by state, almost all states require you to have liability insurance. Your state may also require you to carry personal injury protection (PIP) and uninsured/underinsured motorist coverage.

There’s no deductible for liability-only claims. Your insurer pays up to the policy limits per claim. As long as the claim amount doesn’t exceed your liability limits, you won’t owe anything out of pocket. But if it does, you can be responsible for paying the excess amount.

Cons of liability-only coverage

Liability-only coverage doesn’t cover your vehicle’s damages or your injuries or medical bills if you cause an accident. You’ll have to pay these bills yourself.

However, if the other driver causes the accident, your injuries and vehicle damage should be covered under their liability insurance — if they have it. Otherwise, uninsured/underinsured motorist coverage may come into play if you have it — or you can sue the other driver for damages.

State-minimum liability insurance might also not be enough to cover the damages if you cause an accident. For example, if you have limits of $50,000 per accident of bodily injury coverage and the other party’s medical bills end up being $65,000, they can sue you for the difference. If they win, your wages can be garnished and your assets seized.

What Does Full Coverage Cover?

Full coverage is not actual coverage but a term that describes a combination of coverages that protect you and your vehicle. Full-coverage car insurance usually includes liability insurance, plus comprehensive and collision coverages.

Collision insurance pays to repair or replace your car if it’s damaged by another vehicle or object, such as a fence or guardrail. Comprehensive coverage is also called “other-than-collision” insurance because it covers what collision coverage doesn’t, such as:

• Vandalism
• Theft
• Broken windows and windshields
• Weather damage
• Falling objects
• Animal damage

You can also include other coverages in your full-coverage policy based on your needs. Rental car reimbursement, gap insurance, and medical payments coverage are examples of optional add-ons you may want to include in your policy.

Pros of full coverage

Full-coverage insurance can provide more affordable protection for your vehicle. Instead of paying to repair or replace your car, you may only need to pay your deductible if you have a full-coverage policy.

The extra cost of full coverage may be worth it, considering the price of a new vehicle has increased by 10.4% and vehicle repair costs by 12.5% since 2021, according to the Insurance Information Institute.

Full-coverage auto insurance also provides other benefits. For example, if you have gap insurance and your vehicle is a total loss, your policy could pay the difference between your car’s value and what you owe on your loan. Medical payments coverage or PIP can cover your medical care and other related expenses, such as lost wages.

Cons of full coverage

Full-coverage insurance costs more than liability insurance. If you’re on a tight budget, you might find it hard to afford a full-coverage policy. However, if you can’t afford to repair or replace your vehicle, you probably can’t afford to go without full coverage.

Although your state might not require full coverage, you might have to carry it if you finance or lease your car. Most lenders require you to carry collision and comprehensive insurance. Extras like gap insurance and rental reimbursement are optional.

If you file a claim for comprehensive or collision coverage, be prepared to pay a deductible. You can set a different deductible for each coverage. The higher the deductible, the lower your car insurance rate, but the more you’ll pay out of pocket if you file a claim.

How to Decide Which Coverage to Get

If you’re having trouble deciding between liability vs. full coverage, asking yourself these questions can help you choose:

• Can I afford to repair or replace my vehicle if it’s damaged or totaled?
• Are severe weather conditions and vehicle theft rates high in my area?
• Does my lender require me to carry full coverage?
• How old is my car, and what is its value?
• If I cause an accident, do I have health insurance or savings to pay for medical expenses and lost wages?

If you can afford to repair or replace your car, your car isn’t worth much, or you own it outright, you might need only liability coverage. But if you financed or leased your car, can’t afford to fix or replace it, or live in an area with high rates of vehicle thefts or weather events, full-coverage auto insurance might be worth the extra cost.

If you have good health insurance coverage or can afford to pay for injuries out of pocket, the extra cost for PIP or medical payments coverage might not be worth it. But if you don’t have health insurance or can’t afford unexpected medical bills or unpaid time off work, consider adding these coverages to your full-coverage policy.

Do You Need Full Coverage?

You might need full-coverage insurance in certain situations. For example, if you buy a brand-new vehicle, it’s a good idea to have full coverage, even if you pay for it with cash. The average price of a new car is over $48,000, according to Kelley Blue Book data.

If you only have liability coverage, you’ll have to pay full price to repair or replace it if you get into an accident. But you’ll probably only have to pay a deductible if you have full-coverage insurance. If you finance the car and owe more than your car’s “actual cash value (ACV),” gap insurance could help pay the difference. It’s important to note that you can only include gap insurance in a full-coverage policy.

If your car is damaged, stolen, or totaled in an accident, could you pay to replace or repair it? If not, paying the extra cost of a full-coverage policy is worth it.

Liability vs. Full Coverage FAQs

Whether you choose liability vs. full-coverage insurance depends on your finances, vehicle value, and coverage needs. Here are answers to the most common questions about these types of coverage to help you choose.

How do you know if you have full coverage?

Check your insurance policy to see if you have full coverage. If you have liability insurance, comprehensive, and collision coverages, then you have full-coverage insurance. You might also have extra coverages, like medical payments, rental car reimbursement, or roadside assistance.

How much is liability-only car insurance?

The national average monthly cost of liability-only car insurance is $131, according to Compare.com data. Rates can vary by insurance company, so comparing quotes from different insurers can help you find the best price for your coverage needs.

How much is full-coverage car insurance?

The national average full-coverage car insurance premium is $271 per month, according to Compare.com data. Your rate could be higher or lower depending on your coverage choices, limits, deductibles, and personal data, like your age and driving record.

Is full coverage the same as comprehensive insurance?

Full coverage isn’t the same as comprehensive insurance. Comprehensive is a type of coverage you can include in your full-coverage auto insurance policy. It covers damages from animals, rocks, trees, theft, vandalism, and weather, among other things.

What if your car is totaled and you only have liability coverage?

If your car is totaled and you only have liability coverage, you won’t get a check for the totaled value unless someone else is at fault. If you’re at fault in the accident, your car isn’t covered. If someone else is at fault, their property damage liability should pay for your damages.

At what point is full coverage not worth it?

Full coverage may not be worth it if the annual policy cost is greater than 10% of your vehicle’s replacement value. You can determine your car’s value using websites like Kelley Blue Book or NADA. Insurance companies only pay the vehicle’s value (minus your deductible).

Does full coverage cover an at-fault accident?

Full coverage should cover an at-fault accident. Your liability insurance pays for the other driver’s injuries, property damage, and any passengers in their vehicle. Your collision insurance pays for your car’s damage minus your deductible.

Methodology

Data scientists at Compare.com analyzed more than 50 million real-time auto insurance rates from more than 75 partner insurance providers in order to compile the quotes and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.

All the quotes listed in this article have been gathered from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide drivers with insight into how auto insurance companies determine their premiums.

Sources:

1. Cox Automotive Inc, “Kelley Blue Book Analysis: New-Vehicle Transaction Prices Up Less Than 1% Year Over Year, Smallest Increase in Decade,” Accessed August 15, 2023.
2. Insurance Information Institute, “Auto insurance basics—understanding your coverage,” Accessed August 15, 2023.
3. Insurance Information Institute, “Facts + Statistics: Auto insurance,” Accessed August 14, 2023.