Liability vs. Full-Coverage Car Insurance: Which Is Better?

Liability vs. Full-Coverage Car Insurance: Which Is Better?

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When it comes to finding the right car insurance policy for you, it's important to understand the different types of coverage and how much you really need. One of your first decisions will be whether you want liability or full-coverage car insurance. To simplify, liability insurance covers damage you do to others, while full coverage policies cover both your liability and property damage to your own vehicle.

Our guide will help you understand the difference between liability and full-coverage insurance and decide how much protection is right for you.

Liability vs full coverage insurance cost

On average, we found you could save nearly $1,500 when you buy minimum liability coverage instead of a policy that includes comprehensive and collision insurance and higher liability limits.

This graph shows the cost difference of minimum liability coverage vs. full coverage across four major insurers.

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These car insurance rates are based on a 30-year-old man and show the cost difference between full coverage and liability. Allstate is the most expensive for full coverage, charging our sample driver $3,545 annually. However, our sample driver would save $2,155 by choosing minimum liability coverage with Allstate.

What is liability insurance vs. full coverage?

Liability insurance will cover damage to other vehicles or injuries to other people when you're driving. Full-coverage policies do include liability insurance but also additional protection to cover damage to your own vehicle.

In most states, you are required to have some level of car insurance, but these minimum coverage requirements are mostly limited to liability coverage. Full coverage — a shorthand name for policies that include comprehensive and collision insurance — is never required by state law, but your lender may require it if you lease or finance your car.

What is liability coverage?

Liability insurance is required by most states and covers the cost of damage and injuries to others you cause in an accident.

In other words, liability insurance does not cover damage to your own car or injury to yourself — only damage to others for which you're legally liable. Liability coverage is split into two different components: bodily injury liability and property damage liability.

Bodily injury liability coverage will cover the cost of the other person's injuries if you are at fault for the accident, up to the policy's limits. Policy limits normally show two figures:

  • The maximum amount paid per person injured in an accident
  • The maximum amount paid for the entire accident

Typically, the total amount is double the per-person limit. For example, a policy might limit coverage to $15,000 per person injured and $30,000 for all injured people.

Property damage liability coverage pays for damage to other vehicles — or property — when you are at fault. The policy limit for this type of coverage is listed as a single dollar amount, which represents the maximum payout per accident. However, this does not cover damage to your own vehicle.

If you live in a state that does not require car insurance, like New Hampshire or Virginia, you're still financially responsible for injuries and property damage resulting from an accident. So, we recommend you buy some sort of coverage.

What is full-coverage insurance?

Full coverage doesn't mean a policy has all the bells and whistles. This term refers to policies that include liability coverage along with collision and comprehensive insurance.

Collision insurance covers you in situations where you are driving and your vehicle is damaged by another vehicle or object, regardless of who is at fault. Collision coverage is usually not offered on its own and is purchased with comprehensive insurance.

Comprehensive insurance will pay for repairs in noncollision incidents, such as vandalism, theft and damage from weather, natural disasters, falling objects and animals.

Collision and comprehensive insurance will pay for damage to your car up to its actual cash value. Actual cash value is the amount your vehicle is worth after subtracting depreciation costs — such as wear and tear — from the original purchase price of the vehicle.

Full coverage is not legally required on a state level but is often required by your lender if you lease or finance your car. With comprehensive and collision insurance, you will be responsible for covering the cost of your deductible, which may range from $250 to $1,000.

Is it better to have full coverage or only liability insurance?

Full-coverage policies already include liability insurance, so you'll need to figure out if comprehensive and collision coverage will also benefit you. We recommend full coverage if the value of your car greatly exceeds the cost of adding comprehensive and collision insurance to your policy. When choosing whether to buy full coverage or just liability coverage, factors to consider include:

  • When is only liability insurance required rather than full coverage?
  • If it's not required, is full coverage worth the extra cost?
  • How to know if your car is valuable enough to make full coverage worth it

When is only liability coverage required rather than full coverage?

Minimum liability coverage is required by state law, and full coverage is not. However, if your car is leased or financed, the bank or car dealership may require you to buy a full-coverage policy. This protects the lender because you'll be able to repair the asset that secures the loan (your car).

If you own your vehicle outright, you have no obligation to buy full coverage. However, if you have a newer car or one that still has notable value, full coverage may be worth the investment to protect you against high costs after an accident.

If it's not required, is full coverage worth the extra cost?

The cost difference between liability and full coverage can be fairly significant. Minimum liability insurance is often cheaper, but full coverage protects you against the cost of damage to your car, not just to others.

If your current car is worth more than the combined cost of a full-coverage policy and deductible, full coverage may be worth the money. Say your car is currently worth $25,000, and your car is totaled in a collision with a tree. Collision insurance would cover the full $25,000, minus your deductible.

If you don't have collision insurance, you'll lose the equity in your car. As a general rule, full coverage costs drivers about $1,000 per year, so those who own valuable vehicles can save themselves from some huge expenses.

If your car is worth less than the cost of full coverage, you may want to choose liability-only coverage, as your premium will be much lower. Typically, if your car is worth less than $4,000, it may make more sense to go with minimum liability coverage.

How to know if your car is valuable enough to make full coverage worth it

Deciding on the type of coverage you need largely depends on how much your car is worth. The value of your car will depend on its age, mileage and general wear and tear. Insurers use their own methods to calculate the value of a given used car, and you probably won't be able to assess the value of your car by yourself.

If you want a ballpark figure of your car's value, Kelley Blue Book and other car value estimators can help you estimate the value of your vehicle. Though it's not exact, this number can give you guidance as to whether the value of your car exceeds the cost of buying full coverage.


Our sample driver was a 30-year-old man driving a 2015 Honda Civic EX with no available credit history. According to our data source, Quadrant Information Services, this sample driver is equivalent to a driver with fair to poor credit. All car insurance quotes were analyzed from all available ZIP codes within each state.

For our sample driver's full-coverage policy, we gave him coverage limits slightly above any one state's minimum requirements.

Full-coverage policy

Coverage type
Study limits
Bodily injury liability$50,000 per person/$100,000 per accident
Property damage liability$25,000 per accident
Uninsured/underinsured motorist bodily injury$50,000 per person/$100,000 per accident
Comprehensive and collision$500 deductible
Personal injury protectionMinimum when required by state

Our car insurance rates for minimum-coverage policies show the average cost of a policy that meets any state's minimum requirements for 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.