What’s the Difference Between Comprehensive and Liability Coverage?

Last Updated on November 3, 2022

Comprehensive coverage and liability coverage are two common types of car insurance. However, they cover different things.

Liability coverage pays for damage you cause to other people or property while driving, including medical bills, vehicle repair expenses, and similar costs. Comprehensive coverage, meanwhile, covers damage to your vehicle that occurs outside of a collision.

Keep reading to find out everything you need to know about the difference between comprehensive and liability coverage.

Table of Contents:

• The Difference Between Comprehensive and Liability Coverage
• What Is Liability Coverage?
• What Is Comprehensive Coverage?
• Liability Coverage Is Much Cheaper than Comprehensive Coverage
• Other Things to Know About the Difference Between Comprehensive and Liability Coverage

The Difference Between Comprehensive and Liability Coverage

Many drivers carry both comprehensive and liability coverage. They protect you in different ways:

• Comprehensive coverage covers damage that occurs to your vehicle outside of collisions with other vehicles. If a tree falls on your vehicle while parked, for example, or if you collide with an animal, then you make a claim through comprehensive coverage. Comprehensive coverage also covers theft of your vehicle and vandalism to your vehicle – including stolen vehicles, broken windows, and other incidents.
• Liability coverage covers any damages for which you are liable while driving. If you damage someone else’s vehicle in a collision where you were at fault, for example, then you are liable for the accident and must compensate the other driver for any damage. Similarly, if you injure another driver, passenger, or pedestrian while driving, then liability coverage covers medical bills, personal injury costs, and related expenses incurred as a result of your actions.
• Liability coverage consists of two core coverages, including bodily injury liability coverage and property damage liability coverage. Bodily injury liability coverage covers injuries to other people you caused while driving, while property damage liability coverage covers damage to other property – like someone’s car or your neighbor’s fence.
• Liability coverage is mandatory in virtually every state, while comprehensive coverage is optional in every state.
• Most lenders require comprehensive coverage when leasing or financing a vehicle. If you do not fully own your vehicle (say, if you’re still making car payments or lease payments), then you may be required to carry comprehensive coverage until you fully own your vehicle.
• Even when comprehensive coverage is not required, many drivers carry comprehensive coverage for added protection. Comprehensive coverage is part of full coverage auto insurance, and it can provide you with full compensation for your vehicle after a loss.

What Is Liability Coverage?

Liability coverage consists of two core policies, including bodily injury liability coverage and property damage liability coverage. These two coverages work in different ways to compensate others who are injured – or had their property damaged – as a result of your actions while driving:

Bodily Injury Liability Coverage: Bodily injury liability coverage compensates a person after that person is injured as a result of your actions. If you collided with another vehicle and are 100% at fault, for example, then you may be liable for any medical bills, ambulance expenses, rehabilitation costs, pain and suffering, lost wages, and other costs incurred by the driver and passengers of the other vehicle. These costs can quickly add up, which is why virtually every state requires drivers to carry bodily injury liability coverage. Most states require $20,000 to $50,000 of bodily injury liability coverage by law, and many drivers exceed these limits for added protection.

Property Damage Liability Coverage: Property damage liability coverage covers any liability you have for damaging someone else’s property. If you smash into a neighbor’s fence, for example, or damage someone else’s vehicle in an accident, then your insurance covers the cost of repairing or replacing that property. Most states require property damage liability coverage.

Virtually all states require a specific amount of liability coverage. Your insurance must meet minimum liability limits in your state. Otherwise, you cannot legally drive in your state.

New Hampshire does not technically require liability coverage. Some states, including Virginia, allow drivers to pay a fee to drive without liability insurance. Other states, including California, allow drivers to use a surety bond (essentially, a deposit in a bank) in lieu of liability insurance.

What Is Comprehensive Coverage?

Comprehensive coverage, unlike liability insurance, is optional in all states. No state requires drivers to carry liability insurance.

Comprehensive coverage covers the value of your vehicle, minus depreciation. It protects your vehicle from incidents that occur outside of collisions with other vehicles.

Comprehensive coverage covers things like:

• Theft of your vehicle
• Vandalism to your vehicle
• Collisions with animals
• Fallen tree branches and windstorm damage
• Environmental damage, including fire or water damage
• Other damage that occurs to your vehicle outside of collisions with other vehicles

If your vehicle is stolen, for example, then you would make a claim through comprehensive coverage. Your insurer sends you a check for the full value of your vehicle, minus depreciation.

Or, if you collide with an animal, then you make a claim through comprehensive coverage. You pay your deductible, and insurance covers all remaining costs of repairing that damage to your vehicle.

Most dealerships, leasing companies, and financing companies require full coverage car insurance, which includes collision coverage, liability coverage, and comprehensive coverage. If you are making car payments, then you may need to carry comprehensive coverage for the duration of your loan or lease.

Even after paying off your vehicle, you may wish to continue carrying comprehensive coverage. It protects your vehicle from damage outside of accidents, and it could provide you with thousands of dollars of compensation after a loss.

As your vehicle gets older and is worth less, you can safely drop comprehensive coverage. Many drivers switch to liability-only insurance policies, for example, with older vehicles to save money.

Liability Coverage Is Much Cheaper than Comprehensive Coverage

If you want to legally drive while paying as little as possible for car insurance, then liability coverage is your best choice.

The average cost of a full coverage car insurance policy, which includes collision coverage, liability coverage, and comprehensive coverage, is around $1,450 per year.

The average cost of a minimum liability policy, in comparison, is just $905 per year.

When you have full coverage car insurance, your insurer is covering the value of your vehicle along with your liability for damages to other people and property. In comparison, liability-only coverage does not cover your vehicle whatsoever; it exclusively covers your liability after damaging other property or injuring other people.

Other Things to Know About the Difference Between Comprehensive and Liability Coverage

It’s up to you to decide whether you want liability coverage or full coverage car insurance. Here are some things to consider when determining your insurance needs:

You May Require Comprehensive Coverage When Leasing or Financing a Vehicle: If you don’t own your vehicle outright, then you generally require full coverage car insurance. Most dealerships, lenders, and financing companies require full coverage car insurance (which includes collision, liability, and comprehensive coverage) for the duration of the lease or loan.

Deductibles: You pay a deductible when making a claim through your comprehensive coverage. This deductible tends to be lower than it is with collision coverage. The average comprehensive coverage deductible is around $250, for example, while the average collision coverage deductible is $500 to $1,000. You do not pay a deductible with liability coverage.

You May Want to Drop Comprehensive Coverage on Older Vehicles: If you have an older vehicle that isn’t worth much money, then it may be safe to drop comprehensive coverage. Eventually, comprehensive coverage may cost more than your vehicle is worth. Even a minor accident could lead to a total loss insurance claim. Consider dropping comprehensive coverage on older vehicles to save money.

You Must Have Liability Insurance to Buy Comprehensive Coverage: You cannot buy comprehensive coverage on its own. You must buy liability insurance with comprehensive coverage. A standard full coverage car insurance package includes liability coverage, collision coverage, and comprehensive coverage.

Average Annual Cost: The average annual cost of liability insurance is around $905 per year, while the average annual cost of full coverage car insurance is around $1,450 per year. If you’re trying to pay as little as possible for car insurance, then liability insurance may be the right choice.

Consider Exceeding Minimum Liability Insurance Limits: Most states have relatively low minimum liability insurance limits. Technically, you only need to meet these limits to legally drive. However, even a minor accident can cause damage exceeding these limits. Your insurer covers you up to the limits of your policy, and you pay all remaining costs out of pocket. If the other driver has $100,000 of medical bills and you only have $30,000 of bodily injury liability coverage as required by your state, for example, then you must pay the remaining $70,000 out of pocket. Many drivers carry $1 million of liability coverage, for example, to avoid having a single accident ruin their lives.

It’s Generally Worth It to Carry Full Coverage Car Insurance: If you can afford it, full coverage car insurance is generally the right choice. Unless you have an old vehicle or a vehicle that isn’t worth much money, it’s generally in your best interest to carry full coverage car insurance to protect your vehicle. Otherwise, you receive no compensation after a collision, theft of your vehicle, or any other incident involving damage to your vehicle.

Liability Coverage Provides No Coverage for your Vehicle in an At-Fault Collision: Some drivers carry liability insurance to save money. However, if you only have liability insurance, then you receive no compensation for your vehicle after an at-fault accident. You must pay for car repair or replacement costs out of pocket.

Final Word – Comprehensive vs. Liability Coverage

Comprehensive coverage and liability coverage are two important car insurance coverages, but they work in different ways to protect you while driving.

Liability insurance, mandatory in most states at all times, compensates drivers for the damage they cause to other people or their property while driving. Comprehensive coverage, meanwhile, covers the cost of repairing or replacing your own vehicle after an incident that occurs outside of an accident.

Contact your insurer or check your policy today to verify you’re carrying optimal car insurance for your unique needs.