Liability vs. Full Coverage Car Insurance At a Glance
Most states require drivers to have liability coverage in their auto insurance policy. This is coverage that pays for another driver’s medical bills or property damage if you are at fault for an accident. Full coverage, on the other hand, is an optional coverage that includes liability coverage as well as additional protection for your own vehicle.
Compare liability with full coverage to determine which option — either liability insurance by itself or bundled into full coverage — would be the most beneficial for you.
Table of Contents
Collisions Can Cost Thousands — Consider Adding More Coverage For Protection
Collisions can be expensive, so having the right coverage in place is crucial to protecting yourself and your vehicle. In 2020, the average claim for passenger injuries in a crash was $20,235. For property damage, such as denting someone’s fender or totaling their car, the average claim was $4,711. Without insurance, you would be responsible for paying these costs out of pocket.
Liability vs. Full Coverage Auto Insurance
Liability Insurance | Full Coverage Insurance | |
|---|---|---|
Coverages | Bodily injury liability, property damage liability | Multiple, including liability coverages. Varies depending on insurer and policy. |
Mandatory? | Yes, with exceptions for some Alaska, New Hampshire, and Virginia drivers | No, this is optional |
Fault | Pays other driver if you are at fault | Pays for repairs to your vehicle no matter who is at fault |
Liability and full coverage car insurance both provide financial protection after a car accident where you are found to be at fault. Liability coverage helps pay for the other driver’s claims, and when bundled together into full coverage, your full coverage policy would also pay for expenses involved with repairing damage done to your own vehicle, regardless of who was at fault.
Understanding Liability Insurance
Any time you cause an accident, you’re legally responsible for paying for any damage and injury treatment suffered by the other driver, as well as their passengers if they had any in the vehicle at the time of the collision. Liability insurance is meant to help you with these expenses, and this coverage is mandatory for all drivers except for those eligible for exemption in Alaska, New Hampshire, and Virginia.
Without this coverage, you may be personally responsible for paying these costs out of pocket, which can be financially devastating. However, it should be noted that liability insurance does not cover any damages to your own car or your own injuries.
Types of Liability Insurance
There are two types of liability insurance:
- Bodily injury liability: Bodily injury liability covers the other driver’s medical expenses, wages lost due to injury, and any rehab or recovery treatments they need. For example, if you are at fault for a collision and the other driver needs to go to the hospital for X-rays, your bodily injury liability coverage would pay for it.
- Property damage liability: Property damage liability covers the repair costs to the other driver’s property if you cause an accident, including to their car or belongings inside the car. For example, if you are distracted and ram into another driver’s car, damaging their bumper and fender as well as causing their laptop inside to fall and crack, your property liability coverage would help pay for the replacement or repair of both the car and the laptop.
Coverage Limits
Many liability insurance policies have a set limit per person and per accident on what they pay out. For example, your policy might offer $25,000 bodily injury liability per person in coverage, with a maximum of $50,000 of bodily injury coverage per accident. There is typically no deductible for liability claims.
Mandatory Auto Insurance Liability Coverage By State
The majority of states require liability coverage to ensure you can pay for damages to the other driver if you are involved in an at-fault accident. Here’s a look at the state-by-state minimum liability coverage requirements:
State | Minimums |
|---|---|
$25,000 bodily injury liability limit per person $50,000 maximum for all bodily injuries per accident $25,000 maximum for property damage per accident | |
$50,000/$100,000 for bodily injury or death $25,000 for property damage | |
$25,000 bodily injury liability for 1 person $50,000 for 2 or more persons $15,000 property damage liability | |
$25,000 for bodily injury or death of 1 person in any 1 accident $50,000 for bodily injury or death of 2 or more persons in any 1 accident $25,000 for damage to or destruction of the property of others | |
$15,000 for injury/death to 1 person $30,000 for injury/death to more than 1 person $5,000 for damage to property | |
$25,000 for bodily injury or death to any 1 person in an accident $50,000 for bodily injury or death to all persons in any 1 accident $15,000 for property damage in any 1 accident | |
$25,000 per person $50,000 per accident for bodily injury liability $25,000 per accident for property damage liability | |
$25,000 for bodily injury or death of 1 person $50,000 for bodily injury or death of 2 or more persons $10,000 for injury to or destruction of property of others | |
$10,000 minimum limits of bodily injury liability per person $20,000 per crash $10,000 property damage liability per crash | |
$25,000 per person Bodily Injury Liability $50,000 per incident $25,000 per incident Property Damage Liability | |
$20,000 per person $40,000 per accident bodily injury liability $10,000 per occurrence property damage liability | |
$25,000 per person Bodily Injury Coverage $50,000 per accident Bodily Injury Coverage $15,000 in Property Damage Liability coverage | |
$25,000 for injury or death of 1 person in an accident $50,000 for injury or death of more than 1 person in an accident $20,000 for damage to property of another person | |
$25,000 for bodily injury to or the death of 1 individual $50,000 for bodily injury to or the death of 2 or more individuals in any 1 accident $25,000 for damage to or the destruction of property in 1 accident | |
$20,000 of bodily injury to or death of 1 person in any 1 accident $40,000 because of bodily injury to or death of 2 or more persons in any 1 accident $15,000 because of injury to or destruction of property of others in any 1 accident | |
$25,000/person for bodily injury $50,000/accident for bodily injury $25,000/accident for property damage | |
$25,000 for all claims for bodily injury damages sustained by any 1 person $50,000 for all bodily injury damages sustained by all persons as a result of an accident $25,000 for all property damage as a result of any 1 accident | |
$15,000 for bodily injury to 1 person $30,000 for bodily injury to more than 1 person in a single accident $25,000 coverage for damage to some1 else’s vehicle or other property | |
$50,000 liability for the injury to or death of any 1 person $100,000 liability for 1 accident resulting in injury to or death of more than 1 person $25,000 liability for property damage | |
$30,000 for bodily injury $60,000 for 2 or more people $15,000 property damage | |
$20,000 per person – Bodily Injury to Others $40,000 per accident – Bodily Injury to Others $5,000 per accident – Damage to Some1 Else’s Property | |
$50,000 for a person who is hurt or killed in an accident $100,000 for each accident if several people are hurt or killed $10,000 for property damage in another state | |
$30,000 for injuries to 1 person $60,000 for injuries to 2 or more people $10,000 for physical damage to the other driver’s vehicle or for damage to property | |
$25,000 per person (limited to a single accident) $50,000 per accident for bodily injury $25,000 per accident for property damage | |
$25,000 per person for bodily injury $50,000 per accident for bodily injury $25,000 per accident for property | |
$25,000 because of bodily injury to or death of 1 person in any 1 accident and subject to the limit for 1 person $50,000 because of bodily injury to or death of 2 or more persons in any 1 accident $20,000 because of injury to or destruction of property of others in any 1 accident | |
$25,000 because of bodily injury to or death of 1 person in any 1 accident $50,000 because of bodily injury to or death of 2 or more persons in any 1 accident $25,000 because of injury to or destruction of property of others in any 1 accident | |
$25,000 for bodily injury or death of 1 person in any 1 accident $50,000 for bodily injury or death of 2 or more persons in any 1 accident $20,000 for injury to or destruction of property of others in any 1 accident | |
$25,000 per person for bodily injury $50,000 if 2 or more persons are hurt $25,000 for property damage | |
$15,000 per person – bodily injury liability $30,000 per accident – bodily injury liability $5,000 per accident – property damage liability | |
$25,000 for bodily injury to or death of 1 person $50,000 for bodily injury to or death of 2 or more persons $10,000 for property damage in any 1 accident | |
$25,000 for bodily injury and $50,000 for death for a person involved in an accident $50,000 for bodily injury and $100,000 for death for 2 or more people in an accident $10,000 for property damage for a single accident | |
$30,000 Bodily injury (1 person) $60,000 Bodily injury (2 or more people) $25,000 Property damage | |
$25,000 per person (the maximum amount payable to 1 person) $50,000 per accident (the maximum amount payable to all people injured in 1 accident) $25,000 per accident – property damage liability | |
$25,000 for injury/death of 1 person $50,000 for injury/death of 2 or more people $25,000 for property damage in an accident | |
$25,000 of bodily injury protection per person $50,000 per accident $25,000 of property damage protection | |
$25,000 per person $50,000 per crash for bodily injury to others $20,000 per crash for damage to others’ property | |
$15,000 for injury or death of 1 person in an accident $30,000 for injury or death of more than 1 person in an accident $5,000 for damage to property of another person | |
$25,000 bodily injury liability per person $50,000 bodily injury liability per accident $25,000 property damage liability per accident | |
$25,000 per person for bodily injury $50,000 for all persons injured in 1 accident $25,000 for all property damage in 1 accident | |
$25,000 bodily injury liability insurance per person $50,000 total bodily injury liability per accident $25,000 property damage liability per accident | |
$25,000 for each injury or death per accident $50,000 for total injuries or deaths per accident $15,000 for property damage per accident | |
$30,000 of coverage for injuries per person $60,000 per accident $25,000 of coverage for property damage | |
$25,000 because of liability for bodily injury to or death of 1 person $65,000 because of liability for bodily injury to or death of 2 or more persons arising out of the use of a motor vehicle in any 1 accident $15,000 because of liability for injury to, or destruction of, property of others arising out of the use of a motor vehicle in any 1 accident | |
$25,000 for 1 person $50,000 for 2 or more persons killed or injured $10,000 for damages to property in any 1 crash | |
$30,000 Injury or death of 1 person $60,000 Injury or death of 2 or more people $20,000 Property damage | |
$25,000 for injuries or death to another person $50,000 for injuries or death to all other people $10,000 for damage to another person’s property | |
$25,000 per person $50,000 per accident $10,000 Property Damage Liability | |
$25,000 for 1 crash, 1 injury $50,000 for 1 crash, 2 or more injuries $25,000 for property damage | |
$25,000 for the injury or death of 1 person $50,000 for the injury or death of more than 1 person $10,000 for property damage | |
$25,000 bodily injury 1 person $50,000 bodily injury per accident $20,000 property damage liability |
Exceptions to Mandatory Coverage
The three exceptions to mandatory auto insurance liability coverage are Alaska, New Hampshire, and Virginia. However, even these states have some rules about insurance to follow, including minimum coverage limits if you do decide to purchase insurance:
- Alaska: Drivers are only exempt from mandatory coverage in certain parts of the state because they are rural and less populated. Otherwise, drivers must still meet auto insurance minimums.
- New Hampshire: New Hampshire does not require auto insurance, but drivers do need to show proof of financial responsibility in case they’re involved in an at-fault accident.
- Virginia: Drivers have the option to not to get insurance if they pay a $500 uninsured motor vehicle fee to acknowledge that they’re driving at their own risk.
Pros and Cons of Liability-only Car Insurance
- It is mandatory in most states to drive.
- Your premiums could be cheaper.
- You can avoid wasting money insuring an older car.
- You can have extra money available for emergencies.
- It does not cover damages to your own vehicle.
- You assume financial risk.
- It may not be sufficient.
- You may still need additional coverages to comply with your state’s requirements.
Advantages of Liability-only Car Insurance
- It is mandatory in most states to drive. Many states impose a fine or driver’s license suspension if you’re caught driving without the minimum liability insurance coverage. For example, in Pennsylvania, you could face a $300 fine, a 3-month vehicle registration suspension, and a 3-month driving license suspension.
- Your premiums could be cheaper. Because liability insurance does not offer any coverage for your own car in an accident, it might be much more affordable than a full coverage policy.
- You can avoid wasting money insuring an older car. Many people with older cars prefer liability insurance instead of full coverage because it’s not worth paying a higher monthly premium for protection on a car where repair costs could outpace the actual value of the vehicle.
- You can have extra money available for emergencies. The price difference between full coverage and liability coverage could allow you to put some extra money into savings. You can use this fund to pay for damage to your vehicle if you get in an accident.
Drawbacks of Liability-only Car Insurance
- It does not cover damages to your own vehicle. Liability insurance only covers damages to other parties’ property and injuries. It does not cover damages to your own vehicle or personal injuries in an at-fault accident, so you cannot use it to help repair your own car.
- You assume financial risk. If you’re involved in an accident and the damages exceed your liability coverage limits, you may be financially responsible for the difference, potentially leading to significant out-of-pocket costs.
- It may not be sufficient. Depending on your specific circumstances, such as driving a high-value vehicle or living in an area with high accident rates, liability insurance alone may not provide adequate protection.
- You may still need additional coverages to comply with your state’s requirements. Some states require additional coverages beyond just liability, such as underinsured/uninsured motorist coverage, personal injury protection coverage, and/or medical payments coverage.
Understanding Full Coverage Car Insurance
Full coverage is a type of policy that bundles several types of coverages together. It includes liability coverage, but often also includes collision coverage, which covers the cost of repairing or replacing your own vehicle in case of an accident, regardless of who was at fault. Many full coverage policies include additional coverages as well, such as comprehensive coverage, roadside assistance coverage, and more.
However, while full coverage can provide a high level of protection, it’s important to note that it may come with a higher premium. It is important to carefully consider your needs and budget before selecting a policy.
Coverages Bundled In a Full Coverage Auto Policy
Full coverage policies meet each state’s minimum coverage requirements, such as liability insurance, uninsured/underinsured motorist coverage, and/or PIP minimums. However, some full coverage insurance policies include optional coverages too. Here are some of the main coverages you may see in this type of policy:
- Liability insurance: Liability insurance offers coverage for the other driver’s injuries and property damage when you’re at fault for an accident.
- Collision insurance: Collision insurance offers coverage for your car if you’re in a collision, regardless of fault. For example, if you hit a guardrail and damage your fender, collision insurance would help pay for your vehicle’s repairs from the incident. Collision insurance also covers accidents when your car is parked, such as if another driver backs into your car in a parking lot.
- Comprehensive insurance: While comprehensive may sound like a synonym for full coverage, it’s actually a different type of product altogether. Comprehensive insurance offers coverage for your car during non-collision events, such as animal accidents, weather, fire, and vandalism. As an example, if someone defaces your car, comprehensive insurance would help repair the damages.
- Personal injury protection (PIP): Personal injury protection, which is required in many states, offers coverage for your medical bills if you’re in an accident. Your personal health insurance policy would cover the majority of your medical bills in an accident, but PIP would help to fill in the gaps in coverage for driving-related injuries. It can pay for lost wages due to injuries, surgical treatments, and ambulance services.
- Medical payments (MedPay): MedPay insurance is very similar to PIP, in that it can provide coverage for medical bills that your health insurance doesn’t cover after an accident. The difference is that it excludes some of PIP’s additional coverages, such as lost wages and rehabilitation services.
- Uninsured and underinsured motorist coverage: Uninsured and underinsured motorist coverage, which is required in many states, offers protection if you’re in an accident caused by someone who doesn’t have insurance or doesn’t have enough insurance to cover the damage. It can cover damage to your car or property, as well as help pay for your medical bills.
Factors Affecting Full Coverage Costs
Full coverage car insurance costs more than liability-only insurance because it offers more protection. As such, the following typically affects how much you can expect to pay for this type of auto policy:
- Deductible amount: The deductible is the amount you pay out of pocket before your auto insurance coverage kicks in after a covered incident. Higher premiums typically see lower auto insurance premiums, whereas as lower deductibles tend to be offset by higher premiums.
- Your driving record and history: Insurance companies look at your driving record to assess your risk level a driver. Drivers with a history of accidents or traffic violations are seen as a higher risk, and so are likely to pay a higher premium compared to someone with a clean driving record.
- Your vehicle’s type, value, and age: Generally, expensive or high-performance cars are costlier to repair or replace, so they are also more expensive to insure compared to lower value vehicles. Therefore, the type of vehicle you drive can significantly impact your overall car insurance premium.
- Policy details, including types and limits: Generally, the more coverage you have, the higher your premium will be, and the less coverage you have, the lower your premium will be. For example, a full coverage policy that does not include optional coverages would generally have a lower premium than one that does.
Pros and Cons of Full Coverage Car Insurance
- Your car has full protection, no matter who is at fault.
- It may be required if you took out an auto loan or are leasing your vehicle.
- You can pick and choose which coverages you want.
- You will meet all of your state’s requirements for coverage.
- It costs more than liability-only coverage.
- It may be unnecessary for older vehicles.
- There are deductibles to meet before insurance kicks in.
Advantages of Full Coverage Car Insurance
- Your car has full protection, no matter who is at fault. No matter what type of accident you’re in, the main difference between full coverage and liability coverage is that full coverage offers more thorough protection for your car. As long as your expenses don’t exceed your policy maximums, the insurance company could pay them.
- It may be required if you took out an auto loan or are leasing your vehicle. If you took out a loan to pay for your car, many lenders require you to have full coverage so that the car is protected in case of accident. This ensures that their investment in your vehicle stays safe and that you can pay the lender back if the car ends up being totaled.
- You can pick and choose which coverages you want. Since full coverage isn’t a set type of coverage, it can give you the flexibility to tailor which coverages you want to add on. For example, you may find you don’t need MedPay as well as PIP, especially if you already have extensive health insurance coverage. Or, you may want to add on other optional coverages such as rental car reimbursement coverage for occasions where you need a loaner after your car is in an accident.
- You will meet all of your state’s requirements for coverage. Full coverage policies include all the coverages that states mandate for drivers, so you can be certain that you are meeting your state’s rules for insurance.
Drawbacks of Full Coverage Car Insurance
- It costs more than liability-only coverage. Full coverage insurance typically comes with higher premiums compared to liability-only policies, which may be a financial burden for some drivers.
- It may be unnecessary for older vehicles. If you have an older vehicle with a low market value, full coverage may not be cost effective, as the cost of premiums may outweigh the potential payout in the event of a claim.
- There are deductibles to meet before insurance kicks in. Depending on the type of coverage needed, there are often deductibles, which means you’ll be responsible for paying a specified amount out-of-pocket before your insurance coverage kicks in. This can lead to additional costs in the event of a claim.
Comparing Liability Insurance and Full Coverage
When deciding between liability vs. full coverage, keep in mind that your driving habits, monthly budget, risk factors, and where you live could all affect whether one type of coverage is better for your needs. In addition, extra costs or extra savings upfront do not necessarily mean it is the most affordable option over the long run.
As an example, if budget is one of your most important consideration, you might be tempted to choose liability coverage without full coverage because it is cheaper when it comes to monthly premium payments. However, if you’re in an accident, that means you may have to pay for repairs for your own car out of pocket, costing you significantly more than full coverage would have.
Consider Liability-only Insurance If…
- You have a nearly spotless driving record. If you’ve proven that you’re unlikely to be involved in a collision of any sort, then you may be able to get by with liability coverage alone. This would allow you to save money on monthly premiums with a relatively low risk of needing the extra coverages that full coverage would provide.
- You live in a relatively rural area. Rural areas typically have a much lower volume of vehicles on the road, making collisions more unlikely. Just like if you have a clean driving record, it would allow you to spend less on your overall auto insurance policy while maintaining a low risk of needing extra coverage. That said, comprehensive coverage could still be helpful for protection against incidents like fire, hail, and theft.
- You have an emergency fund if you get in an accident. As noted above, liability insurance might be cheaper upfront than full coverage, but not if you’re in a collision. However, if you have a crash fund that you can dip into if you have an accident, it might be worth it to take advantage of lower monthly premiums.
- Your car isn’t worth insuring. Many older cars that have a relatively low resale value often aren’t worth insuring with full coverage. The payout you’d get after a collision wouldn’t justify the increase in monthly premiums. In these cases, maintaining just state-mandated liability coverage would often be enough.
- You don’t drive your car a lot. If you drive your car infrequently, such as only a few times a month, then it may not be worth it to have full coverage due to the low probability of being involved in an accident. The more you’re on the road, the more likely you are to get in an accident.
Consider Full Coverage Car Insurance If…
- You drive very frequently. If you’re on the road multiple times a day, such as commuting to and from work, then having full coverage is important. Being on the road more often increases your risk of getting in an accident, and full coverage may be worth it to offset this additional risk.
- Your car is valuable. People with new or expensive cars might choose full coverage so that their insurance can help pay the bills if they have an accident. This is especially important if your car is totaled, as your auto loan lender still expects to be paid back, even if your car is inoperable after a collision.
- You live in a densely populated area. Because cities have more cars on the road, confusing traffic patterns, and narrower roadways, you may be more likely to get in a crash in this type of setting. Even if you consider yourself a safe driver, full coverage can offer protection from someone side-swiping your car while it’s parked on the street or from a burglar that broke into your car overnight.
- You’ve taken out a loan to pay for your car. Most lenders require you to have full coverage if you borrowed from them to pay for your car. If you don’t enroll in this coverage, they may do so for you at a much more expensive rate.
An Alternative: Liability Insurance with Other Coverages
Another option to consider is purchasing the coverages required by your state and only one or two additional optional coverages, depending on what makes the most sense for you and your vehicle. For example, liability insurance with comprehensive or collision coverages added on allows you to have insurance help pay for repairs to your own vehicle, regardless of fault.
This does not offer as complete of coverage as full coverage, but would still allow for more protection than liability insurance alone.
Other Optional Coverages to Consider
- Roadside assistance: This coverage helps pay for services you may need if your car breaks down on the road. It typically includes coverage for towing, jump-starting your battery, changing a flat tire, and providing fuel delivery or locksmith services.
- Rental reimbursement: This coverage helps pay for the cost of renting a car if your car is temporarily out of commission due to an accident or other covered event. There is typically a maximum number of days covered, and you’ll need to have collision and comprehensive coverage to be eligible for rental reimbursement.
- Gap insurance: This coverage is for those who took out a loan to purchase or lease their vehicle. It covers the difference between the actual cash value of your car and the amount you owe on your car loan. It is designed to protect against scenarios where the insurance payout is less than the amount you owe on your loan or lease. Gap insurance is typically required if you’re leasing a car.
Further Ways to Save On Your Auto Policy Costs
- Safe driver discounts: These discounts reward those who exhibit safe driving behaviors by not getting involved in collisions and/or filing claims. If you have a good driving record with no accidents or traffic violations, you may be eligible for a safe driver discount, which can help you save money on your car insurance premium.
- Bundling policies: If you have multiple insurance policies such as homeowners or renters insurance, you can bundle them with your car insurance policy from the same insurance company. By bundling, you may be able to get a multi-policy discount, which can lower your overall insurance costs.
- Comparing quotes: Insurance rates can vary depending on the insurer. By comparing quotes from multiple providers, you can compare offers and potentially save on your car insurance premium.
All in All
Choosing the right type of car insurance is a critical decision. Liability-only car insurance provides basic coverage that pays for damages or injuries you cause to others in an accident, but it does not cover damages to your own car. It’s also generally cheaper than full coverage insurance, making it an attractive option for those on a tight budget. However, liability-only insurance may not provide enough protection if you’re in a serious accident or if you have a valuable car that you cannot afford to repair or replace out of pocket.
Full coverage car insurance, on other hand, provides more protection that covers both your car and the other party in an accident. It typically includes liability, collision, and comprehensive coverage, as well as optional coverages such as roadside assistance. But this extended coverage also means it costs more than liability-only insurance.
When deciding which type of car insurance to choose, it’s essential to consider factors such as your budget, the value of your car, your driving habits, and your risk tolerance. Ultimately, the choice between liability-only and full coverage car insurance depends on your needs and circumstances, and it’s important to carefully evaluate your options before making a decision.