Liability vs. Full Coverage: What’s the Difference?
Last Updated on September 14, 2023
When shopping for auto insurance, you need to decide whether you want liability coverage or full coverage.
What’s the difference between liability and full coverage car insurance? Which one is right for you?
Liability coverage protects other people from damage you inflict. If you cause an accident, for example, then your liability coverage will cover the cost of repairing the other driver’s vehicle. It can also cover medical bills, lost wages, and other costs incurred by the person you injured.
Full coverage car insurance, meanwhile, includes liability, collision, and comprehensive coverage. Full coverage includes the minimum required car insurance (liability coverage) along with collision coverage (optional) and comprehensive coverage (optional). Collision coverage covers damage to your own vehicle after an accident, while comprehensive coverage covers non-accident-related damages, including theft, vandalism, or environmental damage (like a fallen tree branch).
Keep reading to discover everything you need to know about liability and full coverage car insurance.
What Is Liability Insurance?
Liability insurance covers the potential cost of damage you cause to others when driving, including medical bills, vehicle damage, lost wages, legal fees, and sometimes even bail.
Most States Require Two Types of Liability Injury Coverage:
Bodily Injury Liability Coverage: Bodily injury liability coverage covers damage to other drivers, passengers, or pedestrians as a result of your actions. If you are at fault for an accident, for example, and the other driver requires $10,000 of medical treatment, then your bodily injury liability coverage will cover this amount.
Property Damage Liability Coverage: Property damage liability coverage covers damage to other property as a result of your actions. If you smash into a neighbor’s fence, for example, or collide with a vehicle, then property damage liability coverage will cover these damages.
States have specific minimum amounts of required liability insurance coverage. In California, for example, drivers are required to have $15,000 of bodily injury liability coverage per person, $30,000 of bodily injury liability coverage per accident, and $5,000 of property damage liability coverage. These requirements may be expressed as 15/30/5 on your insurance policy.
What Is Full Coverage Insurance?
Full coverage car insurance includes more than just the minimum required liability insurance. Liability insurance protects other people from certain damages, but it does not protect your own vehicle. Full coverage insurance, meanwhile, does provide certain protections.
Full coverage consists of liability, collision, and comprehensive coverage.
Collision Coverage: Collision coverage covers damage to your own vehicle after an accident. If you caused an accident, for example, and there’s $5,000 of damage to your vehicle, then collision coverage will cover these damages.
Comprehensive Coverage: Comprehensive coverage covers damage to your vehicle that occurs outside of an accident, including theft, fire, weather damage, and vandalism. Unlike liability coverage, comprehensive coverage does not cover damage you cause to other people or property.
Full coverage car insurance adds considerable protection to your vehicle. It also increases the cost of auto insurance substantially.
The Definition of Full Coverage Varies Between Insurers
Generally, full coverage car insurance refers to an insurance policy with liability, collision, and comprehensive coverage.
However, some insurers have different definitions for full coverage. Some insurers add rental car reimbursement coverage to their policies, for example, while others add roadside assistance.
Compare full coverage insurance quotes online today to ensure you’re getting the best deal on your full coverage car insurance.
Liability Versus Full Coverage Car Insurance
We made a table to highlight some of the situations liability insurance will cover you in and some of the situations full coverage will cover you in.
| Are You Covered If You... | Liability Coverage | Full Coverage |
|---|---|---|
| Damage another car | YES! | YES! |
| Injure passengers in other car | YES! | YES! |
| Damage public or private property | YES! | YES! |
| Damage your car | ✘ | YES! |
| Hurt yourself and need medical attention | ✘ | YES! |
| Injure your passengers | ✘ | YES! |
What Should You Do to Decide Between Liability and Full Coverage?
There are several things to consider when deciding between liability and full coverage car insurance, including:
Cost: Liability insurance is the cheapest legal insurance you can get. Full coverage increases your premiums significantly, but it also adds significant coverage.
Value of your Vehicle: You can safely drop full coverage car insurance on older vehicles. If your vehicle is only worth a few thousand dollars, then full coverage car insurance may not be worth it. It’s going to cost more to repair the vehicle than the vehicle is worth, which means you can safely drop full coverage.
Risk Aversion: If you only have liability insurance, then you’re absorbing more risk. If your car is damaged in an accident, then you might have to pay to repair or replace the car out of pocket. If you’re willing to pay more money for more peace of mind, then full coverage car insurance may be worth it.
Full Coverage is Required on Leased or Financed Vehicles: No state requires you to have full coverage car insurance. However, all leased or financed vehicles are required to have full coverage insurance. This requirement is stipulated in your financing policy. Remember: the dealership or financing company is a co-owner of the vehicle until it’s paid off, and full coverage car insurance protects the collateral of your loan.
Full Coverage is Optional on All Owned Vehicles: If you own your vehicle outright, then full coverage car insurance is not required.
How Much Does Full Coverage Car Insurance Cost?
The average American pays around $900 per year for liability insurance. In some states, basic liability insurance costs under $500, while in other states, it’s over $1,400.
The cost of full coverage car insurance also varies by insurer. According to Nerdwallet, this is what the average cost of full coverage and minimum coverage looks like by company:
| Insurer | Minimum (Liability) Coverage Cost ($) | Full Coverage Cost ($) |
|---|---|---|
| 21st Century | 776 | 1,588 |
| Allstate | 784 | 1,834 |
| American Family | 601 | 1,233 |
| Amica | 458 | 1,183 |
| Automobile Club Group | 606 | 1,468 |
| Auto Club of SoCal | 633 | 1,610 |
| Auto-Owners | 519 | 1,357 |
| Country Financial | 405 | 1,136 |
| CSAA | 543 | 1,710 |
| Erie | 295 | 835 |
| Farmers | 926 | 1,865 |
| GEICO | 478 | 1,198 |
| Kemper | 531 | 1,557 |
| Liberty Mutual | 900 | 1,778 |
| Mercury | 639 | 1,675 |
| MetLife | 826 | 1,679 |
| National General | 414 | 1,067 |
| Nationwide | 682 | 1,349 |
| NJM | 644 | 1,301 |
| Progressive | 774 | 1,766 |
| Safeco | 475 | 1,317 |
| State Farm | 624 | 1,511 |
| The Hanover | 1,392 | 3,122 |
| The Hartford | 537 | 1,495 |
| Travelers | 815 | 1,528 |
| USAA | 415 | 1,023 |
Adding full coverage to your policy will increase your premiums substantially. The average full coverage car insurance policy is priced at around $1,400 per year.
How Much Liability Coverage Do You Need?
All states have certain limits for liability coverage (although two states, Virginia and New Hampshire, do not technically require drivers to have any liability coverage).
Some drivers meet the minimum legal limits for their state, buying just enough car insurance to stay on the road.
Other drivers exceed the minimum legal limits, giving themselves added protection and added peace of mind to cover a range of situations.
What Isn’t Covered by Full Coverage Car Insurance?
Full coverage car insurance covers a lot of things – but not everything.
First, even if you have full coverage, your insurance may not cover damage if you are hit by an uninsured driver (someone without insurance) or an underinsured driver (someone with too little liability coverage). Consider adding uninsured/underinsured motorist coverage to your policy to cover these damages.
Second, full coverage car insurance may not cover your own medical bills in all situations.
Full coverage car insurance also does not cover mechanical breakdowns, which are damages caused by normal wear and tear on your vehicle, nor does it cover tire damage, items stolen from your vehicle, or the cost of renting a car while your vehicle is being repaired.
Final Word – Full Coverage vs. Liability Car Insurance
If you only have liability insurance, then you’re meeting the minimum required insurance limits in your state – but you’re not protecting your own vehicle.
Full coverage, meanwhile, costs considerably more, but it also adds protection to your vehicle, covering it against accident-related damages and non-accident-related damages.
Depending on your budget and aversion to risk, either liability insurance or full coverage insurance may be the right choice for you.
