Liability vs. Full Coverage Car Insurance: Which Is Right for Me?

Liability insurance is divided into two main categories: bodily injury and property damage. These two types of coverage make up a basic liability insurance policy. State required insurance refers to mandatory minimum amounts of these types of coverage.

  • Bodily injury
    • With liability insurance, bodily injury coverage assists with the medical costs of drivers, passengers and pedestrians injured in an auto accident. This coverage only covers others and only when you are the at-fault driver. It will not reimburse anything toward your personal medical expenses related to the accident.
  • Property damage
    • This section covers damages done to the property of others, usually a vehicle. Suppose you are at fault in a car accident. In that case, this portion of your liability insurance will help to pay for the costs of repairing or replacing the other driver’s vehicle.

Full coverage insurance generally refers to a combination of two types of insurance. These policies include both collision and comprehensive insurance. Both types deal with property damage but are specialized in a way that doesn’t overlap, making them complementary.

  • Collision insurance
    • Whether from a tree or another vehicle, collision insurance covers damages that your car sustains from accidents while in use. The key is that the vehicle was being driven during the accident. This insurance won’t cover damages to your vehicle while it isn’t being driven, no matter the cause of damage.
  • Comprehensive insurance
    • Comprehensive insurance is the inverse of collision insurance. This type of insurance only covers damages that are sustained while the vehicle isn’t in motion. For instance, a hit and run on a parked car will be covered by comprehensive, but only if it is parked and not in use.

When you’re shopping for the right car insurance — something that’s a legal requirement in most states when you own a car — one of the biggest questions that comes your way is whether or not you should have liability (or minimum) coverage or a full coverage policy on your car. Liability insurance is usually cheaper, but a full coverage policy will cover more. Which is the right answer?

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      The answer is: it depends. Overall, the average national insurance cost is $1,758 per year, so you can expect to pay a higher rate if you prefer full coverage or a little bit less if you’d rather just have liability insurance.

      Liability coverage limits

      Nearly every insurance policy specifies coverage limits. These limits are the maximum amount that a policy will pay out toward a claim. Customers can often request higher or lower limits, which will then increase or decrease their premiums. Liability coverage limits for auto insurance have minimum requirements in all but three states. Insurers represent these limits in a simple number format: # / # / #.

      The first number represents the limit for bodily injury per person per accident. The second shows the total limit on bodily injury for all persons per accident. The third number represents the limit for property damage coverage. Together, these three numbers show the various coverage limits of a liability insurance policy. While customers have some say in their coverage limits, some arrangements are more common than others. For example, one of the more standard sets of limits is 25/50/25. These are the required auto insurance liability limits in several states. These limits translate to $25,000 per person for bodily injuries, $50,000 for total bodily injury costs and $25,000 for property damage. Each of these limits is per accident.

      [ More: When Should You Downgrade Your Car Insurance? ]

      Who should get liability coverage?

      In general, the older your car, the more likely it is that you can just get by with the cheaper liability insurance. Liability insurance only covers damage to the other driver’s car in an accident that’s your fault (if you’re not at fault, the other driver’s insurance will pay for damages).

      So who should get liability coverage? Here are some examples of people who would benefit from it:

      • An 18-year-old teen who’s driving his father’s hand-me-down, ten-year-old Ford Fiesta. It doesn’t make sense to have full coverage on a car that old, when the repairs if he was in an accident would likely cost more than the car is worth.
      • A family with a second car, a Honda Civic, that’s eight years old, that they just use around town. Their main car, which is two years old, has comprehensive coverage, but it would be a waste of money to have it on the second one.
      • Someone who is on a very tight budget, and wants to save as much money as possible to trade in their 11-year-old Volvo on a newer car. If they are a careful driver, and are able to put aside the money they’re saving on insurance toward the new vehicle, they can probably get by with minimum liability.

      Other factors that you’ll want to keep in mind when deciding if you should just have liability include how often you drive, where you live and if your car is kept primarily in a garage. If you don’t drive often and keep your car off the street, you’re less likely to have an accident. And if you live in a safe neighborhood where your car is unlikely to be vandalized or damaged in any way, you’re not as likely to need comprehensive coverage.

      Who should get comprehensive coverage?

      Comprehensive coverage is insurance that covers additional elements that aren’t covered by liability. Mainly, it provides coverage for your own car in the case of an accident. It’s optional, but may be a good idea for you.

      So who should get comprehensive coverage? Here are some examples of people who would benefit from it:

      • Let’s say you just got your first brand-new car, after driving around a junker since you got your license. You want to protect your investment as much as possible, right? If that’s the case, you’ll want to pay the extra cost to have comprehensive coverage so that if your car is in any sort of accident, even if it’s just a one-car slide into a fence post during an ice storm, you’ll be covered.
      • Or if you have a car of fairly high value, such as a sports car or top-of-the-line SUV. Once again, you want to know that you’ve got coverage that will pay out enough on a claim that you can repair the car to a like-new state in the case of a mishap, because repairs for this kind of car will be expensive.
      • Comprehensive insurance is also a good idea if you drive extensively — perhaps you travel a great deal or drive for your job using your own car. The more you drive, the more you are at risk of an accident, and comprehensive coverage may be a good choice for you.

      [ See: Who Needs Non-Owner Car Insurance? ]

      If you’ve spent a considerable amount of money to purchase a decent car, you probably don’t want to have to buy another car again in the near future. If it would be financially impossible for you to afford another car if your current car is damaged, full coverage insurance is the way to go.

      The cost of minimum and full coverage car insurance

      Obviously, the monthly cost for liability coverage is going to be less than the monthly cost of a full coverage policy. So, the real question is whether or not the additional benefits of the extra coverage are worth it.

      For me, the question comes down to this: If your car were completely totaled, could you afford to pay off any remaining debt on it out of pocket as well as buy yourself a comparable car to replace it?

      If you think about that question for a bit, it becomes pretty clear that liability works best in some cases and full coverage insurance works best in other cases.

      Depending on the level of coverage you need, your rate can vary greatly. Typically, upgrading from liability-only insurance to full coverage will add on an additional $851 per year. Check out the average rates of full-coverage premiums versus liability-only rates from The Zebra in the table below.

      CompanyFull-Coverage PremiumLiability-Only Premium
      Liberty Mutual$1,472$876
      State Farm$1,496$585

      If I am on a budget should I consider liability or comprehensive insurance?

      The easy answer to this question is “liability,” because your premium payments will be lower with liability than they would be with full coverage insurance. But ask yourself: if my car is in an accident, can I afford to get it repaired or buy a new one without relying on insurance?

      If the answer is “no,” it may be worth considering the extra expense for comprehensive insurance so that you would be covered for repairs in the event of an accident. Remember: even safe drivers sometimes have accidents, and the more you drive, the more likely you are to be in one.

      So in the end, if you go with liability, you’re taking a gamble that you won’t have an accident that would put you in the red because you needed expensive repairs or even a new car if your old one is totaled. Only you can decide which option is best for you.

      Auto Insurance FAQs

      Each state has its own set of requirements when it comes to minimum coverage. Make sure to check your state minimum coverage requirements before choosing between a liability or full coverage policy.

      It may not be worth it to take out collision coverage on an older car. If your vehicle isn’t worth a lot of money, you may be better off paying for repairs on your own in the event of an accident, rather than paying a monthly premium.

      As your car nears the end of its usable life, you should consider dropping some pieces of your full coverage policy. At a certain point, the eventual payout on an old car isn’t worth the price you’d end up paying in premiums. It’s a personal decision, but you may be more suited to take the risk of not having complete coverage in the case of an accident.

      We welcome your feedback on this article. Contact us at with comments or questions.

      Joshua Cox-Steib

      Contributing Writer

      Joshua Cox-Steib is a personal finance contributor. He lives in Tulsa, Oklahoma, with his wife and their three pets. He spends his spare time reading, writing, and gardening. Find out more on Joshua Cox-Steib at

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      • Angelica Leicht
        Angelica Leicht
        Mortgage Editor

        Angelica Leicht is an editor at The Simple Dollar who specializes in mortgages, mortgage refinancing, home equity loans, and HELOCs. She is a former contributing editor to and