Liability Vs. Full Coverage Guide

Key Points:

• Liability insurance covers property damage and personal injuries for other drivers when you’re at fault in a car accident.
• Full coverage includes comprehensive and collision insurance, which cover your vehicle after an accident or if it’s stolen, vandalized, or damaged by something other than an accident.
• Most states require liability insurance but it’s smart to get full coverage for better protection.

Taking the time to determine the level of car insurance coverage you need will not only help you make the right decision for your car but also for your wallet. So, how do you decide between liability vs. full-coverage car insurance?

In this article, we’ll examine what each auto insurance policy entails, when you may want to purchase liability vs. full coverage, and how much these types of insurance may cost you. We’ll also recommend a couple of the best car insurance providers based on our thorough industry research.

What’s The Difference Between Liability Vs. Full Coverage?

The difference between liability and full coverage car insurance is this: 

• Liability insurance covers property damage and medical expenses for other parties if you cause an accident.
• Full coverage provides protection for your car after an accident or if it’s stolen, vandalized, or damaged by something other than an accident, like a fallen tree limb.

On its own, liability insurance won’t pay to repair your car. However, its purpose is to cover the risk you pose to other drivers when you get behind the wheel. It’s legally mandated as the minimum requirement in almost every state. Full-coverage auto insurance covers damage to your own vehicle and is usually optional–unless you’re leasing or financing your car. 

What Is Liability Insurance?

One way to think about liability coverage is that it’s not meant to insure you, but rather cover what you might hit with your car. There are two main components to liability insurance:

• Bodily injury liability: Covers medical bills for other drivers and their passengers when you cause a collision.
• Property damage liability: Covers the cost of damage to the other parties’ cars, fences, or other property in the event of an accident.

How much liability insurance you need depends on the state where you live. Most states require a certain amount of liability car insurance to drive legally, but you can always purchase a higher limit to ensure you’re protected after an accident.

For example, California requires $15,000 in bodily injury liability per person, $30,000 in bodily injury per accident, and $5,000 in property damage liability per accident. You may see these policies written as 15/30/5 on an insurance policy or quote. If you’re in a wreck and cause $6,000 worth of property damage, your insurer will cover up to $5,000, but you’ll still have to pay the remaining $1,000 out of pocket.

What Is Full Coverage?

The term “full coverage” can be a tad misleading. It doesn’t mean you’re covered for every eventuality–only that your vehicle is also covered by the policy. Full coverage includes liability insurance plus collision and comprehensive coverage.

Collision covers the cost of repairing your car if it’s damaged in an accident and is often bundled with comprehensive coverage. 

Comprehensive covers the cost of damages that might occur outside an accident–things like theft and vandalism, or weather-related damage such as hail. When added to your policy, collision and comprehensive essentially protect your vehicle from most things that might go wrong.

For this reason, if you’re leasing or financing, your lender will typically require you to carry full coverage rather than liability only to ensure that your vehicle (i.e. the lender’s investment) is adequately protected.

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What Does Full Coverage Not Include?

There are many other insurance coverage options that aren’t necessarily included with full-coverage insurance. Most notably–in many states–full coverage doesn’t pay for costs related to your injuries or those of your passengers after an accident. The following three types of coverage are designed to protect you and your passengers, but are not required in all states.

• Medical payments (MedPay): This covers medical expenses for injuries that you and your passengers sustain during a collision, regardless of who’s at fault. 
• Personal injury protection (PIP): This also handles medical bills, but it extends to lost wages as well. Plus, it includes death benefits for you and passengers in the event of a fatal accident. PIP covers you regardless of who is at fault and is required in no-fault states. 
• Uninsured motorist/underinsured motorist coverage (UM/UIM): This covers you if you’re in a car accident with a driver who’s uninsured or doesn’t have enough insurance to cover your medical bills or repair costs. In some states, this also provides coverage in the event of a hit-and-run. This is a coverage requirement in some states, like Connecticut, Wisconsin, and Oregon.

So when shopping for car insurance, make sure you understand the minimum requirements in your state. If the above coverages are not required, you may want to purchase them anyway to ensure adequate protection. 

Other optional coverages that are not included with full coverage:

• Roadside assistance: This coverage provides towing services, a battery jump, locksmith services, or help with a flat tire when your car breaks down, services, a battery jump, locksmith services, or help with a flat tire.
• Guaranteed asset protection (gap): Gap insurance helps bridge the “gap” between the amount you owe on your car and the full value of your vehicle if it’s totaled or stolen. It may be required by your lender.
• New car replacement coverage: This helps replace your car with a brand new one if it’s totaled while it’s still only a few model years old or under a certain mileage.
• Rental car coverage: This helps pay for the cost of a rental while your car is in the shop for covered repairs.

When getting car insurance quotes, all state minimum requirements will automatically be included, but you have the option to tack on any additional coverages you want.

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Is Liability Insurance Required?

Liability insurance is required in almost every state. In New Hampshire, it’s legal to drive without liability coverage, but you’re still financially responsible for damage you cause. There are consequences if you can’t pay for repairs or medical bills after an at-fault accident.

Some states like Mississippi also allow drivers to deposit cash or take out a surety bond in the minimum liability amounts. In Mississippi, you’d deposit $100,000 into a special account to show you have financial responsibility (the state limits are 25/50/25). A bond costs less than the full deposit, but if it’s used for an accident, you pay the bond company back. These options only make sense if you can cover accident damages with your own finances.

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Is Full-Coverage Insurance Required?

Full coverage is never required by law, but your lender will require it if you have an auto loan. Since the lender technically owns the vehicle until it’s paid off, full coverage protects the lender’s property if it is damaged. Remember, liability coverage only pays for damage caused to other drivers and their property.

If you own your car outright, you don’t necessarily need full coverage. That said, you might want it anyway if the car is worth more than $10,000 or you wouldn’t be able to cover the cost of repairs after an accident.

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What’s The Cost Of Liability Vs. Full Coverage Insurance?

Our rate data shows drivers with good driving histories pay about $798 per year or $67 per month for liability insurance on average. On the other hand, good drivers pay $1,968 per year or $164 per month for full coverage insurance. These rates can vary widely depending on your zip code, vehicle, driving history, accident record, credit history, and more. Having a DUI can increase car insurance rates quite a bit, for example.

Below are a few more examples of average costs for full coverage in different scenarios. They apply to an unmarried man with a 2020 Honda CRV.

*California, Hawaii, Massachusetts, and Michigan don’t use credit score as a factor in determining car insurance rates.

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Liability Vs. Full Coverage: Our Take

Deciding whether you need liability or full-coverage auto insurance really hinges on one thing: your car. Things like your car’s age and mileage, as well as personal factors like your driving history, play into the rate an insurer will give you. The question becomes whether your car is worth the extra amount you’ll pay in premiums for a full-coverage policy.

If you own a vehicle that’s 10 or more years old or has higher mileage, you may end up paying more in full coverage premiums than your car is worth. To find the actual cash value (ACV) of your vehicle, you can check a site like Kelley Blue Book. Then, compare the ACV against your full-coverage policy quote to determine whether the coverage is worth it.

If you own a newer car or one of high value, full-coverage insurance is typically worth the investment. Paying a small fee each month can give you peace of mind on the road and save you thousands in the long run if you end up needing vehicle repairs due to an accident or other incident.

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Our Recommendations For Coverage

The cost of liability vs. full-coverage insurance can vary from provider to provider, so it’s smart to shop around and get quotes from multiple companies before committing to a policy. If you’re not sure where to start, our review team has researched every major car insurance provider in the United States and found that Geico and Progressive are two standout options. Read more about them below and compare multiple quotes to find the cheapest car insurance coverage.

Geico: Best For Basic Coverage

Geico is one the largest auto insurance providers in the U.S. and is an excellent option due to its substantial network of agents, competitive rates, and simple claims process. The company offers all standard types of coverage, as well as a range of add-ons like rental reimbursement and mechanical breakdown insurance. AM Best also rates the company A++, which means Geico has a strong financial backing and the ability to meet customer claim obligations.

Compare: Geico vs. Progressive

Progressive: Best For Usage-Based Insurance

Progressive is another well-reviewed company and the insurer holds an A+ rating from AM Best. On top of offering several discounts for policy owners–such as savings for practicing safe driving habits or combining home and auto insurance policies –Progressive has a great usage-based program called Snapshot^®. Good drivers can save up to $231 per year with the program. Check out our comprehensive Progressive auto insurance review for more information.

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Liability Vs. Full-Coverage Insurance: FAQ

Below are a few frequently asked questions when comparing liability vs. full coverage:

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How We Rate Insurers

Our review process aims to deliver consistent and unbiased assessments of car insurance providers. While there are multiple qualities that make a car insurance company successful, our review team focuses on those we believe are the most important for consumers:

• Reliability: It’s important that an auto insurer is able to meet its claims obligations. Companies with a strong financial strength rating from AM Best score best in this category. Established insurers with a long history of reliable service also receive positive marks.
• Availability: Insurance companies that offer wider availability to consumers in terms of state availability and few eligibility requirements are more likely to meet consumer needs.
• Cost: Cost can be difficult to compare between insurers because so many factors impact annual premiums. The cheapest insurer for one driver may not be the cheapest for another. To determine our cost score, we look at insurance rate estimates generated by Quadrant Information Services, discount opportunities, and consumer reports.
• Coverage: To determine our coverage score, we look at the number of coverage options available as well as coverage limits and deductible options. Our ratings also take into account additional services and benefits like roadside assistance.
• Service: We comb through customer reviews on sites like the Better Business Bureau (BBB) to learn about customer experiences. Insurers with a low volume of complaints score well in this area. We also consider the claims process, giving higher ratings to car insurance providers that offer a smooth experience.
• Technology: Providers with an online quote tool, easy-to-use claims app and a usage-based insurance app score best in this category.

*Data accurate at time of publication.

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