What's the Difference Between Liability and Full Coverage?
The difference between liability and full coverage is that liability will cover damage to other vehicles or injuries to other people from accidents you cause, while full coverage also covers your own vehicle. Liability insurance is required in most states, while full coverage is only required if you lease or finance a car.
Key Things to Know About Liability vs. Full Coverage Car Insurance
- Full coverage car insurance costs an average of $4,211 per year.
- Liability car insurance costs an average of $1,407 per year.
- Full coverage includes collision and comprehensive insurance, while liability coverage does not.
- With liability-only insurance, you’ll be on the hook for your own expenses after an accident.
- You should purchase full coverage insurance if you can afford it.
Table of Contents
Liability Insurance vs. Full Coverage: Key DifferencesLiability vs. Full Coverage Cost by Company What Is Liability Insurance?What Is Full Coverage Insurance?Do You Need Liability Insurance or Full Coverage?Tips on Choosing Between Liability and Full CoverageAsk the ExpertsLiability vs. Full Coverage FAQ
Liability Insurance vs. Full Coverage: Key Differences
| Category | Liability | Full Coverage |
|---|---|---|
| What It Includes | Property damage liability Bodily injury liability | Collision Comprehensive Property damage liability Bodily injury liability |
| Is It Required? | Yes, by law in nearly every state | Yes, if you are leasing or financing your car |
| Average Annual Cost | $1,336 per year | $4,211 per year |
| Uses Deductible? | No | Yes |
Liability vs. Full Coverage Cost by Company
Liability insurance is 67% cheaper than full coverage insurance, on average. The exact cost difference between liability and full coverage car insurance for a given driver depends on several factors, including the driver’s insurance company.
| Company | Minimum Coverage | Full Coverage |
|---|---|---|
| Geico | $796 per year | $2,886 per year |
| USAA | $807 per year | $2,802 per year |
| Travelers | $893 per year | $3,518 per year |
| Grange | $976 per year | $4,253 per year |
| Mercury | $1,032 per year | $3,365 per year |
| Progressive | $1,033 per year | $4,041 per year |
| State Farm | $1,032 per year | $3,514 per year |
| Auto-Owners | $1,108 per year | $2,865 per year |
| Esurance | $1,218 per year | $3,166 per year |
| AAA | $979 per year | $5,509 per year |
Data provided by Quadrant Information Services. Rates reflect average costs in California.
What Is Liability Insurance?
Liability insurance is a type of coverage that pays for injuries and property damage sustained by other people and their property in accidents that you cause. Nearly every state requires drivers to carry liability insurance, and in many states, liability insurance is the only type of car insurance that you need to have.
Keep in mind that liability insurance will never pay for your own expenses after a car accident, so if you want your own medical bills and repair costs to be covered, you will need to get additional coverage.
Learn more about liability insurance.
What Is Full Coverage Insurance?
Full coverage is a policy that includes collision and comprehensive coverage in addition to a state’s minimum car insurance requirements. Unlike liability insurance, full coverage covers the policyholder’s own expenses, even in accidents where they are at fault.
Collision insurance is coverage that pays to repair or replace your car after any accident. Comprehensive insurance, on the other hand, covers repair expenses when your car is damaged by something other than an accident, such as vandalism or a natural disaster. Neither type of insurance is required by state law, but you usually have to get both if your car is leased or financed.
Full coverage can also include other types of insurance, such as personal injury protection, medical payments coverage, and uninsured/underinsured motorist insurance. Some states require drivers to have these types of insurance anyway, but they may be optional in other states.
Learn more about full coverage insurance.
Do You Need Liability Insurance or Full Coverage?
You should always get full coverage insurance if you can afford it. No matter how good of a driver you might be, your vehicle is likely going to get damaged in some way or another. Having full coverage insurance will provide a wide financial safety net that will alleviate some of the burden that comes with handling car issues.
When deciding whether or not to purchase liability-only insurance, you need to consider your state’s laws, the value of your car, and your financial situation. A general rule of thumb is that you can consider dropping full coverage insurance if the cost is more than 10% of your car’s value. However, you should not drop collision and comprehensive coverage if you cannot afford to pay out of pocket to repair or replace your car when it’s unexpectedly damaged.
Learn more about whether you need liability insurance or full coverage.
Tips for Choosing Between Liability and Full Coverage
1. Check your loan and lease requirements.
If your car is financed or leased, your lender or lessor likely requires you to have full coverage insurance. This is because your lender or lessor has a financial interest in the car and wants to ensure that it is protected in case of an accident.
2. Shop around and see what you can afford.
Full coverage is generally more expensive than liability insurance. You should consider whether you can afford the higher premium for full coverage and whether the added protection is worth the cost. You should compare quotes for a full coverage policy from at least three different car insurance companies, choose the highest deductible you can afford to pay out of pocket, and look for discounts you’re eligible for.
3. Consider the value of your car.
If your car is new or has a high value, full coverage may be a better option than liability-only coverage. This is because the cost to repair or replace your car in the event of an accident could be significant. On the other hand, if your car is older or has a lower value, liability insurance could be sufficient, since full coverage premiums may be more expensive than paying to repair or replace your vehicle out of pocket if it is damaged, totaled, or stolen.
4. Evaluate your savings and tolerance for risk.
If you are risk-averse or do not have the savings to easily afford car repairs, full coverage may be the way to go. However, if you are comfortable taking on more risk or you have the money to pay for vehicle repairs or replacement out of pocket, liability insurance may be a more cost-effective option.
5. Consider your driving habits.
If you drive frequently, live in an area with a high crime rate or poor road conditions, or have a history of at-fault accidents, you should consider purchasing full coverage insurance. Full coverage can provide you with peace of mind knowing that your vehicle is protected in case of an accident, theft, or damage caused by natural disasters.
Ask the Experts
To gain more insight about liability vs. full coverage insurance, WalletHub posed the following questions to a panel of experts. Click on the experts below to view their bios and answers.
1. What is the biggest advantage of liability insurance over full coverage?
2. What is the biggest advantage of full coverage over liability insurance?
3. What types of drivers do you think should consider liability-only car insurance?
4. Should people always get full coverage if they can afford it?
Ask the Experts
Peter F. Lake
Charles A. Dana Chair and Director, Center for Excellence in Higher Education Law and Policy; Professor of Law, College of Law, Stetson University
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Amy J. Schmitz
John Deaver Drinko-Baker & Hostetler Endowed Chair in Law, Michael E. Moritz College of Law, Ohio State University
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Thomas C. Galligan
Dodson & Hooks Endowed Chair in Maritime Law, James Huntington and Patricia Kleinpeter Odom Professorship, Professor of Law, Paul M. Hebert Law Center, Louisiana State University
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Lee S. Siegel
J.D., Litigator, Hurwitz Fine
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John C. Lopez
CFP®, Senior Professor of Practice, Bauer College of Business, University of Houston
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Jarome Gautreaux
Adjunct Professor, Law School, Mercer University; Founder and Owner, Gautreaux Law, LLC
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