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Liability-only vs. Full Coverage Car Insurance: How to Choose

Liability-only vs. Full Coverage Car Insurance

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updated: March 10, 2024

A liability-only car insurance policy typically represents the minimum coverage needed to be financially responsible if you cause an accident that injures others or damages their vehicle. Full coverage adds financial protection for your vehicle if it's stolen or damaged.

In most states, liability coverage is required by law—you need it to drive legally. Full coverage is optional but worth considering if you have a newer or high-value vehicle. A lender may require full coverage if you finance your car with a loan or lease.

What is a car insurance policy?

A car insurance policy is a contract between you and an insurance company such as Liberty Mutual, State Farm, or Progressive. That contract consists of one or more types of coverage. Each coverage specifies certain conditions under which the insurance company will reimburse you or another party to help pay for car repair, medical bills, or other expenses.

What is a liability-only policy?

Liability only refers to a policy that includes only two coverages—bodily injury and property damage. Both of these coverages apply only if you’re determined to be “at fault” in an accident.

Bodily injury (BI) liability

Bodily injury (BI) liability coverage pays medical bills and related costs for the other driver and passengers. It does not pay for your own medical bills.

Property damage (PD) liability

Property damage (PD) liability coverage pays the other driver’s vehicle repair or replacement costs. It does not pay for your own repair costs.

Most U.S. states require that your policy has both BI and PD liability coverage. They ensure that you’re financially responsible to others for any damage or injuries you might cause.

And note that if you’re involved in an accident in which another driver is determined to be at fault, their liability coverage should ensure your medical and car repair bills are paid.

What is a full-coverage policy?

Full coverage refers to a policy that includes both BI and PD liability and two additional coverages—collision and comprehensive—that help pay for damage to your vehicle.


Collision coverage reimburses you for the cost to repair or replace your vehicle if it's damaged in an accident in which you're determined to be at fault.


Comprehensive coverage reimburses you for the cost to repair or replace your vehicle if it’s stolen, or damaged by a falling tree branch, hail, flooding, fire, or other act of nature.

Collision and comprehensive are not required by law. However, if you finance your car with a loan or lease, the lender may require you to have these coverages on your car insurance policy. Be sure to check with your insurance company or agent to be sure you have the coverages you need to stay legal and meet the requirements of your loan or lease.

Understanding limits and deductibles

When you buy a car insurance policy, you must choose limits for your liability coverages. The limit is the maximum amount of money the insurance company will pay for a claim. You'll be responsible for any cost above your limit. So, for example, if your BI limit is $50,000, and you're responsible for an accident in which the other driver has $60,000 in medical bills, you'll be responsible for the $10,000 difference.

Choosing a higher limit means you have more coverage. But it also means you’ll pay more for the policy.

If your policy includes collision and comprehensive, you’ll need to choose deductibles. The deductible for each of these coverages is an amount of money you’ll need to pay if you have a claim. For example, if you have a $1,000 collision deductible and the cost to repair your car is $5,000, your insurer will pay the repair shop $4,000. You’ll be responsible for the final $1,000.

Choosing lower deductibles means you have less to pay out of pocket if you have a claim, but will pay more for your policy.

Other available car insurance coverages

Other coverages are typically available and can be added to your policy to increase your protection. They can include:

Personal injury protection (PIP)

Personal injury protection (PIP) pays for your medical bills related to injuries sustained in an accident, regardless of who is at fault in that accident. Some states currently require drivers to have PIP. It’s available as an option in others.

Uninsured/underinsured motorist (UM/UIM)

Uninsured/underinsured motorist (UM/UIM) coverage helps pay for your medical or car repair bills if you’re involved in an accident caused by another driver who is either uninsured or whose liability limits are insufficient to pay your bills.

Medical payments (medpay)

Similar to health insurance, medical payments, or medpay, coverage helps you pay your medical bills if you’re injured in an accident.

Rental reimbursement

Available to drivers with collision or comprehensive coverage, rental reimbursement helps pay for the cost of a rental car if your car is in the shop for a repair covered by your policy.

Summary of liability-only vs. full-coverage car insurance

Liability-onlyFull coverage
  • BI liability
  • PD liability
  • BI liability
  • PD liability
  • Collision Comprehensive
May include additional, optional coverages chosen at your discretion.
Level of protection
  • Covers damage or injuries you cause to other drivers and their passengers.
  • Covers damage or injuries you cause to other drivers and their passengers.c
  • Covers damage to or theft of your vehicle.
  • Coverages required by law in every state except Virginia and New Hampshire.
  • Some states’ laws require additional coverages such as PIP or UM/UIM.
  • State-required coverages plus additional coverages that a lender may require if you have a loan or lease.
National average annual premium
  • $631
  • $1,176.18

Liability-only vs. full-coverage car insurance costs

Because a full-coverage car insurance policy provides more protection than a liability-only policy, you can expect it to cost more. In fact, a full-coverage policy costs nearly twice as much, on average, as a liability-only policy.

According to the National Association of Insurance Commissioners (NAIC), the national average annual premium (cost) for liability-only is $631. The average premium for full coverage is $1,176.18.

Liability-only vs. full coverage car insurance costs by state

Here’s how the average annual premiums break down by state.

StateLiability onlyFull coverage
District of Columbia
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Rhode Island
South Carolina
South Dakota
West Virginia

Liability-only vs. full-coverage car insurance: cost by insurance company

Many insurance experts advise shopping around to find the lowest car insurance premium. We see why here: There’s a $195 difference between the least and most expensive insurers for a liability-only policy and a $309 difference between the least and most expensive insurers for full coverage.

CompanyLiability onlyFull coverage
State Farm

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

Choosing between full coverage and liability only means closely examining your personal needs.

Liability-only policies are typically for people who meet the following criteria:

  • Older, lower-value car.

  • Have enough savings to handle car repair/replacement following an accident.

    Full-coverage policies are better for people who meet these criteria:

  • Newer, higher-value car.

  • Do not have enough savings, or simply do not want to pay for car repair/replacement following an accident.


We gathered data from multiple sources. State and national average premium data is from the National Association of Insurance Commissioners (NAIC) 2019/2020 Auto Insurance Database Report, published in January 2023. The NAIC gathers state-by-state average charged premium data for liability, collision, and comprehensive coverages. Insurance company premium data is from a review by Moneygeek (accessed August 8, 2023).

This information is provided for comparison purposes only, to help our readers get a general idea of the cost of car insurance. Your cost may vary significantly from what is shown here.

TIME Stamp: Liability-only and full-coverage car insurance serve different needs

Nearly every state requires minimum levels of liability coverage, and a liability-only policy is sufficient for many drivers. Other drivers, especially those who finance their vehicle with a loan or lease, should get a full coverage policy, including collision and comprehensive coverages.

Frequently asked questions (FAQs)

Is full coverage the same as comprehensive insurance?

Full coverage is not the same as comprehensive insurance. Instead, comprehensive is one part of a full coverage policy.

Comprehensive refers to a specific coverage available as part of a car insurance policy. It covers theft of or damage to your car by events other than a collision with another vehicle (examples include a falling tree branch, hail, flooding, or fire).

A full coverage policy includes comprehensive coverage, plus collision coverage and state-required liability coverage.

What if my car is totaled, and I have a liability-only policy?

If your car is totaled in an accident caused by another driver, their liability coverage should help pay to replace it. This is regardless of whether or not your policy is liability only.

If the accident is your fault, your car is damaged by an act of nature such as severe weather or fire, or stolen, your liability-only policy, unfortunately, won't help. Your insurance company is only required to pay claims based on the coverages you’ve chosen for your policy. You’ll therefore need to pay out of pocket to repair or replace your car.

If the cost to repair your car is more than the cost to replace it, you may be able to sell the car to a salvage yard to recoup some of the costs.

How do different coverage amounts affect my premium?

Your car insurance premium is based partly on the types of coverage on your policy and the coverage amounts. Adding optional coverages, increasing your coverage limits, and lowering your deductibles will increase the cost of your car insurance policy.

What is the best car insurance company?

The best car insurance company provides the coverage you need and options to customize your policy. And it should provide policies at prices that work for your budget.

You can look at trusted independent reviews, such as those by J.D. Power, and financial-strength ratings by A.M. Best to help narrow your choices. An independent insurance agent can also recommend companies based on your needs.

See our reviews of the best car insurance companies in 2023.

How do I know if I have full coverage?

To know if you have full coverage, check your policy declaration page. This policy summary should be provided when you buy a policy; it may also be available online at your insurer's website or app.

Your policy is considered "full coverage" if you have liability, comprehensive, and collision coverage. Contact your insurance company or agent if you're unsure or have any questions.

The information presented here is created independently from the TIME editorial staff. To learn more, see our About page.