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Understanding the differences between liability-only and full coverage auto insurance will help you select the right kind of policy and avoid bad surprises if you’re in a car accident. The main differences are as follows:
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Liability car insurance pays for others' medical expenses and property damage if you cause an accident.
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Full coverage is an upgraded auto insurance policy that pays out in more situations. The term “full coverage” generally applies to a policy with liability, collision, and comprehensive insurance.
What's covered by liability insurance?
Liability car insurance is required in most states. Liability insurance pays for injuries and damages you cause to other people and their property, up to your policy limits. Say you rear-end another vehicle, and the crash results in bumper damage to both cars, giving the other driver whiplash. Your liability insurance pays for the other driver's vehicle repairs and, depending on the state, their medical expenses too.
However, your liability insurance won’t pay for damage to your own vehicle. For that, you would need collision insurance.
What’s not covered by a liability-only auto insurance policy?
A liability-only car insurance policy does not pay for:
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Damage to your vehicle from an accident, a hit-and-run driver, or an uninsured driver
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Injuries to you or your passengers from an accident, a hit-and-run driver, or an uninsured driver
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Theft of your car
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Damage to your car from hail, natural disasters, fire, falling trees, vandalism, and other problems
What's covered by a full coverage auto insurance policy?
A full coverage auto insurance policy gives you broad coverage for others' bills that you’re responsible for and damage to your own vehicle.
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Liability insurance pays for injuries and property damage you accidentally cause to others.
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Comprehensive insurance pays to repair your vehicle after incidents other than collisions. Examples include theft, vandalism, and hitting an animal. Comprehensive insurance has a deductible, which is an amount deducted from an insurance claims check.
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Collision insurance pays to repair your vehicle after accidents with other vehicles or objects, like mailboxes. You can use collision insurance whether you caused the accident or not. For example, if someone hits your vehicle, you could make a claim on their auto insurance or use your own collision insurance. Generally, you can use collision insurance after a hit-and-run or an accident caused by an uninsured driver. Collision insurance also has a deductible.
What’s not covered by full coverage?
Full coverage car insurance won’t cover medical costs for you and your passengers after an accident.
Roadside assistance and rental cars are not considered part of full coverage, but are available as additional coverage types.
Comparing liability-only vs. full coverage car insurance
Comparing the cost of liability vs. full coverage
Liability-only insurance is always cheaper than full coverage because it covers far less. With a liability-only policy, your insurer only needs to pay for damages you cause to others in accidents. Liability-only policies do not pay claims for repairs to your car, including claims involving weather damage or theft.
Full coverage vs. liability-only car insurance: Which one do you need?
Your decision on whether to buy full coverage versus a liability-only policy will hinge on how much financial risk you want to take on yourself. With a barebones liability-only policy, you’re on the hook if your own vehicle is damaged or stolen.
Other car insurance coverage you might need
Four other types of car insurance that broaden your protections are uninsured motorist coverage, personal injury protection (PIP) or MedPay, rental reimbursement, and gap insurance.
Uninsured motorist coverage
If your car is hit by an uninsured driver, uninsured motorist coverage pays for the medical bills for you and your passengers. In some cases, it can also pay for your vehicle damage. Some states require uninsured motorist coverage.
PIP or MedPay
Personal injury protection, or PIP, and MedPay are two car insurance coverage types that pay medical bills for you and your passengers after an accident, regardless of fault.
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PIP covers medical bills and other expenses like funeral costs, your lost wages, and replacement costs for duties you can’t perform due to the accident, such as childcare costs.
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MedPay pays for car accident medical expenses not covered by your primary health insurance, regardless of fault.
Some states require PIP or MedPay. No state requires both.
Rental reimbursement coverage
Rental reimbursement insurance helps pay for a rental car or public transportation while your vehicle is being repaired after an accident that’s covered by your insurance policy. You can’t add rental reimbursement coverage to a liability-only policy. You can add it to a full coverage policy.
Gap insurance
Gap insurance can be useful if your insurance company deems your car a total loss and you owe a lot on a car loan or lease. In a total loss, the insurer will not pay to repair your car, but instead will pay you for the car's value. If you owe more on a car loan or lease than you receive from the total loss payout, gap insurance covers the difference. You need a full coverage policy to add gap insurance.
Liability-only vs. full coverage insurance FAQs
Does full coverage cover at-fault accidents?
Full coverage includes liability, comprehensive, and collision insurance. Both liability and collision coverage may be needed to pay for damages if you’re at fault in an accident. Liability insurance pays others’ medical bills and repairs the damaged property of others, including other vehicles. Collision insurance covers repairs to your own vehicle.
Does liability insurance cover my car if someone hits me?
No, liability insurance doesn’t cover repairs to your own vehicle. If someone hits you, that driver's auto insurance should pay for the repairs to your vehicle. This may not happen if the other driver has no insurance or leaves the accident without sharing contact information. In those cases, you would need collision insurance to help pay for the damage to your car.
When should I not get full coverage car insurance?
You may not want full coverage car insurance if you own your car outright and it has little value. The maximum payout from a collision or comprehensive claim is the actual cash value of your vehicle if it’s totaled or stolen, so a car with little value will result in only a small claim payment.
Can I switch from full coverage to liability-only insurance?
If your car isn't financed, you can switch from full coverage to liability-only insurance. To make the change, call your insurance company and request the coverage reduction.
Amy Danise and Tim Manni edited this article.
