Cheapest Options for Liability-Only Car Insurance

Cheapest Options for Liability-Only Car Insurance

Liability-only car insurance is the cheapest policy you can buy, but it only protects you against the cost of damages to others.

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Liability-only car insurance is much cheaper than full-coverage car insurance, but it comes with accompanying risks that you should consider before cutting coverage. For instance, liability-only insurance would not cover you if your car were stolen.

Drivers should consider the cost of repair, the value of their car and their own tolerance for financial risk before deciding whether to switch to liability-only coverage.

Which car insurer has the cheapest liability-only car insurance?

We took a look at thirteen top insurance companies available in at least five states to understand which provided the cheapest liability-only car insurance. The cheapest companies often weren't major names, but these insurers may not offer policies everywhere.

For our sample driver:

  • Among major insurers, State Farm offered the most affordable liability-only coverage in absolute terms, with a six-month quote of just $356, 55% cheaper than the average price of $469.
  • GEICO was not far behind, with a price of $409.
  • For those current or former military members who qualify, USAA is the cheapest option by far. Its six month rate is only $215.
  • And some smaller insurance companies can provide very affordable liability-only insurance. Farm Bureau affiliates cost our sample driver an average of $218 for six months, and Erie, available in 12 states and Washington D.C., cost $226.
Bar chart showing the which insurance company has the lowest prices for liability-only coverage
Bar chart showing the which insurance company has the lowest prices for liability-only coverage

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Below we list six-month rates for liability insurance for all the insurance companies that offer policies in at least five states and for which data was available.

Insurers with smaller reach — in other words, those available in fewer states — are often cheaper, and some major names such as Travelers and Farmers can be quite expensive on average.

Major insurersSix-month rateSmaller insurersSix-month rate
USAA$215Farm Bureau Insurance$218
State Farm$356Erie$226
GEICO$409Auto-Owners Insurance$324
Progressive$462American Family$405
Nationwide$502MetLife$485
Allstate$695
Travelers$706
Farmers$735
*USAA is only available for current and former military members and their families.

These prices are for a sample 30-year-old driver with a clean driving history and fairly standard driver characteristics. The cheapest liability insurance for you may differ based on factors such as accident history, credit score, mileage and more.

How to find the cheapest liability-only car insurance

When shopping for the best prices for liability-only car insurance, the most important thing is to get quotes from multiple insurance companies.

We found that the price for liability-only coverage does not have a consistent relationship with the cost of more full-featured plans.

In other words, just because an insurance company gave you the best rates when shopping for a full coverage car insurance policy doesn't mean that it will still provide the lowest price for a liability-only policy.

How much cheaper is liability-only coverage?

Liability-only car insurance is significantly cheaper than full-coverage insurance. Your insurance bill could be reduced by more than half by dropping optional coverage: Among our sample insurers, liability-only cost an average of 63% less.

We examined car insurance rates for eight different popular vehicles, and found that liability insurance makes up about 48% of the total cost of a full coverage insurance policy, with the lion's share of the difference in price being contributed by collision coverage.

Full-coverage insurance generally includes:

  • Liability protection
  • Collision and comprehensive coverage
  • Any other coverages required by law, such as personal injury protection (PIP)
Bar chart showing the price difference between the cost of liability-only car insurance and purchasing full coverage
Bar chart showing the price difference between the cost of liability-only car insurance and purchasing full coverage

Dropping collision and comprehensive coverage puts you at much greater financial risk if you are ever in an accident. If you opt for liability-only coverage, insurance would not pay for damages to your vehicle in any of the following situations:

  • You are at fault in an accident.
  • You are the victim of a hit and run (if you aren't required to have UIM coverage).
  • Your car is damaged by weather, hail or animals.
  • Your car is keyed or vandalized.

Below we list the difference in cost between six-month liability-only and full coverage policies across all our sample insurers.

CompanyMinimum policy costFull coverage policy costDifference
USAA$215$654$439
Farm Bureau Insurance$218$891$673
Erie$226$761$535
Auto-Owners Insurance$324$1,056$732
State Farm$356$869$513
American Family$405$1,021$616
GEICO$409$1,079$670
Progressive$462$1,197$735
Metropolitan$486$1,224$738
Nationwide$502$1,147$645
Allstate$695$1,773$1,078
Travelers$706$1,509$803
Farmers$735$2,140$1,406

Should I switch to liability-only car insurance?

Full-coverage car insurance is more important—and a better deal—when your car is new and becomes less valuable over time.

As your car gets older, collision and comprehensive coverages become less valuable, and it can be a sound financial decision to drop coverage past a certain point.

Here's why:

  • The most money you'll ever get to fix your from a car insurance claim is its actual cash value, or ACV — how much an identical vehicle would cost to buy today.
  • If your car is a total loss, that means the cost to repair your car is more than its actual cash value, and your insurance company will write you a check for the car's ACV.

When your car is new, it has a high ACV, so insurance companies will spend more money to repair it before declaring it to be totaled.

If a new car's ACV is $20,000, your insurance company will pay you a maximum of $20,000 to get it fixed. However, as your car ages, it loses value, so the maximum payout of a collision claim goes down.

If your car's ACV is $5,000, that's the maximum amount your insurer will pay if your car is damaged or stolen.

But even as the maximum payout decreases, your monthly premium generally won't drop very much.

This makes comprehensive and collision coverage effectively a worse deal for an old car than for a new one. At a certain point, it's not worth carrying collision or collision coverage at all.

When to drop comprehensive and collision coverage

At the very least, you should drop comprehensive and collision coverage when the combined annual premium amount for comprehensive and collision coverage plus your deductible is equal to or greater than your car's ACV.

For example, suppose your car is worth $1,200. If your annual premium for comprehensive and collision coverage is $700, and your deductible is $500, the maximum amount you could receive is equal to the amount you've already spent on insurance, so there's no benefit to buying coverage.

If your car's value has not yet reached that threshold, the decision is less clear-cut and more personal.

The first question to ask yourself is whether you'd be able to afford a replacement vehicle or could arrange alternate means of transportation should your car be destroyed or stolen — don't drop coverage if you'd be stranded without it.

Additionally, consider the following statements. The more of them apply to you, the more strongly you should consider switching to liability-only coverage:

  • You could afford to replace your car if it were stolen today.
  • In general, you have a high tolerance for financial risk.
  • You don't drive the car very often, or could depend on alternate transportation like a bicycle or bus to get around.
  • You are not particularly at-risk for your car to be damaged in an accident (e.g., you do not drive at night often, and you are not younger than 21).
  • You are not particularly at-risk for your car to be stolen (e.g., you park your car indoors in a garage at night).

Keep in mind that you may still be required to buy comprehensive and collision coverage for your car if you have a lease or a loan. Most car financing companies require you to purchase these coverages as a way for them to protect their investment while you are still paying it off.

What is liability-only car insurance?

Technically, liability-only car insurance refers to the purchase of only liability coverage. This is coverage that only pays for expenses related to medical care and car damage to the other party in an accident.

In practice, liability-only car insurance coverage is another way to describe the legal minimum amount of car insurance you can buy in order to drive your car.

In 22 states, you really do only need to buy liability coverage to have the minimum coverage. In 28 other states and Washington, D.C., drivers are also required to buy one of the following — or both — in order to meet their minimum insurance requirements:

  • Personal injury protection/Medical payments: Covers your own medical bills (and those of your passengers) after a car crash, regardless of who is at fault.
  • Uninsured motorist coverage: If the other driver in a crash is at fault but does not have liability coverage, uninsured motorist coverage pays for your medical and car repair bills.

Liability-only coverage is often defined by what it most notably lacks: collision and comprehensive coverage. Besides liability, these two coverages generally make up the largest portion of your car insurance bill.

  • Collision coverage pays for damage to your car if you are at fault (or no one is at fault).
  • Comprehensive coverage pays for damage caused by acts of God such as weather, animals or vandalism.

Matt is a Technical Writer at ValuePenguin who works on distilling the complex details of insurance into accessible advice. He previously created educational content at Grovo Learning and MarketSmiths Content Strategists. Matt's consumer-focused analysis of insurance has appeared in publications like CNBC, Yahoo Finance and the Miami Herald.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.