Cheapest Liability-Only Car Insurance (2022)

Cheapest Liability-Only Car Insurance (2022)

Farm Bureau offers cheap liability only insurance at $39 per month, though USAA has even lower rates for drivers who qualify.

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Liability-only car insurance only provides the minimum protection required by your state, which is why it's the cheapest kind of car insurance.

Liability-only insurance is a good option for drivers who have an older car or can afford to repair or replace their car out of pocket.

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Which company has the cheapest liability-only car insurance?

State Farm offered the cheapest liability-only car insurance among 13 top insurance companies, with an annual quote of just $532. That's 24% cheaper than the average rate of $703. Geico wasn't far behind, with a quote of $667 per year for liability insurance.

The graph shows the rates for liability-only coverage from some of the larger insurers in the US

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USAA is the cheapest company for liability only coverage by far for current or former military members who qualify, with rates averaging only $437 per year.

The cheapest liability-only car insurance companies often weren't major names, proving some smaller insurance companies can provide very affordable liability-only insurance. Farm Bureau has an average quote of $472 per year, and Erie, available in 12 states and Washington D.C., costs $503 per year.

Insurers available in fewer states are often cheaper, and some major names such as Travelers and Farmers can be quite expensive on average. The cheapest liability insurance for you may differ based on factors such as accident history, credit score, mileage and more.

Major insurers
Annual rate
Monthly rate
Farm Bureau Insurance$472$39
Auto-Owners$484$40
Erie$503$42
State Farm$532$44
American Family$634$53
Geico$667$56
Progressive$884$74
Allstate$916$76
Nationwide$916$76
Farmers$959$80
Travelers$1,035$86
USAA*$437$36

*USAA is only available for current and former military members and their families.

How to find the cheapest liability-only car insurance

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

The cheapest companies for liability-only coverage don't always have the cheapest full coverage policies.

In other words, just because an insurance company offered the best quotes when shopping for a full coverage car insurance policy doesn't mean that it will also offer you the lowest rate 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: Across 37 insurers, liability-only cost an average of 60% less.

Liability insurance makes up nearly half 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.

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Full-coverage insurance generally includes:

  • Liability protection above the minimum requirement
  • Collision and comprehensive coverage
  • Any other coverages required by law, such as personal injury protection (PIP)
How Liability-Only Insurance Cost Compares vs. Full Coverage

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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.

The difference in cost between liability-only and full coverage policies varies by an average of 61% across top car insurance companies.

Company
Minimum coverage cost
Full coverage cost
Difference
USAA$437$1,170$733
Farm Bureau$472$1,576$1,104
Auto-Owners$484$1,579$1,095
Erie$503$1,379$876
State Farm$532$1,310$778
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How much is liability-only car insurance by state?

The cost of auto insurance varies based on where you live. This is partly due to differences in risk, but is also caused by insurance regulations in each state.

The cost of a liability-only auto insurance policy ranges from approximately half to one-third the cost of a full coverage policy.

State
Monthly cost of liability-only insurance
Monthly cost of full coverage
Alabama$53$145
Alaska$41$119
Arizona$75$185
Arkansas$46$142
California$51$168
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Should I switch to liability-only car insurance?

Full-coverage car insurance is more important — and a better deal — when your car is new. As your car gets older, the protection is less necessary.

As your car gets older, collision and comprehensive coverages become less valuable, and it makes financial sense to drop coverage past a certain point.

Here's why:

  • The most money you'll ever get from a car insurance claim to fix your car is its actual cash value, or ACV — how much an identical vehicle, accounting for its age, would cost to buy today.
  • If your car is a total loss, it 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.

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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 comprehensive or collision coverage at all. You could also look into insuring a cheap car with broad form insurance.

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.

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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. As 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 higher tolerance for financial risk.
  • You don't drive the car very often, or could depend on alternate transportation like a bicycle or bus.
  • You are not particularly at-risk to get into an accident where the car could be damaged (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.

If you decide to remove comprehensive and collision coverage from your policy, we recommend having an emergency fund for windshield repairs, as these can be quite expensive. And you may want to consider keeping comprehensive coverage if you would not be able to afford this type of repair out of pocket.

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What is liability-only car insurance?

Technically, liability-only car insurance refers to the purchase of only liability coverage, either bodily injury or property damage 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 often another way to describe the legal minimum amount of car insurance you can buy in order to drive your car.

In 22 states, you 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 elements out of your control such as weather, animals or vandalism.

If a driver wants to protect their assets but does not have a valuable vehicle, they can opt for a high amount of liability insurance coverage without comprehensive and collision coverage. It often does not cost much more to raise your liability limits considerably.

Frequently asked questions

What is liability car insurance?

Liability car insurance is coverage that pays for damage to others when you're at fault in an accident. It includes coverage for bodily injuries as well as property damage. Liability coverage is required in nearly every state.

Should I get liability-only car insurance?

Liability-only car insurance only includes liability protection and no other optional coverages like comprehensive or collision. People with older, less expensive cars should consider getting liability-only car insurance instead of full coverage. Older cars are worth less than newer ones, so carrying comprehensive and collision has a lower maximum payout.

What is supplemental liability insurance for car rental?

All cars on the road are required to have the legal minimum amount of liability car insurance, including rental cars — you'll get the legal minimum coverage automatically as part of your rental. You have the option to purchase supplemental liability coverage, which boosts your coverage beyond the legal minimum.

Who has the cheapest liability-only car insurance?

The cheapest widely available liability-only car insurance we found comes from Farm Bureau at $39 per month. USAA is cheaper but is not available to all drivers, while Auto-Owners, Erie and State Farm are all affordable options.

What if my car is totaled and I only have liability insurance?

If your car is totaled (the cost to repair it exceeds its value) or stolen and you only have liability insurance, you'll have to pay to replace your car yourself unless another driver was at fault. Liability insurance only pays for damage to other people's cars, not your own.

Methodology

We calculated annual rates for liability insurance for all the insurance companies that offer policies in at least five states and for which data was available. These rates were for a 30-year-old driver with a clean driving history and standard driver characteristics.

To calculate the full coverage and liability-only insurance cost, ValuePenguin collected quotes from 37 insurers for a sample 30-year-old male who drove a 2015 Honda Civic EX. The driver was profiled as having average credit history.

For full coverage rates, we gave the driver coverage limits above any one state's minimum, along with uninsured and underinsured motorist bodily injury coverage, comprehensive and collision insurance. Our rates for liability-only policies represent the average cost of a policy that only meets a state's minimum required auto insurance coverage.

ValuePenguin's analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes may be different.

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.