When shopping for car insurance, the biggest decision you will make is choosing between Liability Only and Full Coverage.
Making the wrong choice can cost you thousands of dollars. If you choose liability only, you might save money monthly but face bankruptcy after an accident. If you choose full coverage for an old car, you might be throwing money down the drain.
In this guide, we compare the two options side-by-side to help you decide which is right for your vehicle and budget.
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| a driver who is troubled on a two-pronged road |
1. What Is Liability Insurance? (The Minimum)
Liability insurance is the legal minimum required by almost every state. It covers the damage you cause to others, not yourself.
- Bodily Injury Liability: Pays for the other driver's medical bills.
- Property Damage Liability: Pays to repair the other driver's car or property (e.g., a fence).
- Does it cover YOUR car? NO.
2. What Is Full Coverage? (The Safe Bet)
"Full Coverage" is not a specific policy type but a combination of coverages that protect you and your vehicle.
- Includes Liability: Everything listed above.
- Collision Coverage: Pays to repair your car if you hit another car or object.
- Comprehensive Coverage: Pays for non-collision damage like theft, vandalism, hail, or hitting a deer.
Comparison Table: Liability vs. Full Coverage
Here is the breakdown of the key differences:
| Feature | Liability Only | Full Coverage |
|---|---|---|
| Covers Other Driver? | YES | YES |
| Covers YOUR Car? | NO | YES |
| Theft Protection? | NO | YES |
| Avg. Monthly Cost | $50 - $80 | $150 - $250 |
Which One Should You Choose?
Choose "Liability Only" If:
- Your car is old (10+ years) or has high mileage.
- The value of your car is less than $3,000 (the "10% rule").
- You can afford to buy a replacement car with cash if yours is totaled.
Choose "Full Coverage" If:
- Your car is new or less than 5 years old.
- You have a loan or lease on the car (Required by lenders).
- You cannot afford to replace your car out of pocket.
- You live in an area with high rates of theft or severe weather.
Final Verdict
The general rule of thumb is: If your annual premium for full coverage is more than 10% of your car's value, it might be time to drop it.
Check your car's current market value on Kelley Blue Book (KBB) and compare quotes today to see how much you can save.
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