Full coverage vs liability only: how to choose

"Full coverage" sounds like it covers everything, but it is not an official type of policy and it does not cover everything. It is shorthand for a combination of coverages. Knowing what is in that combination makes the choice between it and liability only much easier.

What liability insurance does

Liability coverage pays for injuries and property damage you cause to other people, up to your policy limits. It generally does not pay to repair your own car. Almost every state requires drivers to carry liability insurance or otherwise show financial responsibility, and the minimum limits vary by state.

What "full coverage" usually means

Most people use the term to mean liability plus two coverages for your own vehicle:

• Collision helps pay for damage to your car from a crash, usually regardless of who was at fault.
• Comprehensive helps pay for damage from events such as theft, fire, hail, vandalism or hitting an animal.

Both usually carry a deductible, the amount you pay before the coverage applies. Payouts are generally limited to the car's actual cash value, which may be well below what you paid for it or still owe on it. Other coverages, such as uninsured motorist or personal injury protection, may be required or optional depending on your state, so check what a specific policy includes rather than relying on the label.

How the costs compare

Across the 50 states and D.C., the average across states is $174 a month for full coverage and $98 a month for liability only, a difference of about $77. The gap varies widely. In Colorado, it is $120 a month, the widest in our table. Your own gap will depend on your car, your deductible and your insurer. Each state page shows the local difference.

When full coverage usually makes sense

• You have a loan or lease. Lenders and leasing companies commonly require collision and comprehensive, so dropping them may breach your agreement.
• Your car is new or valuable. The potential payout is large relative to the premium.
• You could not easily replace the car. If losing it would leave you without transportation, the protection may be worth the cost.

When liability only may be reasonable

If you own an older car outright and could afford to repair or replace it from savings, the extra premium may not be worth paying. One way to think about it is to compare the most the coverage could pay with what it costs. Take a hypothetical car worth $3,000 with a $1,000 deductible: the most you could collect is about $2,000. If the added premium were $600 a year, you would be paying a large share of that maximum every year. That does not make the choice automatic, but it makes the trade-off visible. Ask an insurer for the actual figures for your car.

Do not confuse cheaper with enough

Choosing liability only is a decision about your own car. It is a separate question from how much liability protection you need. State minimums can be low compared with the cost of a serious crash, and you could be personally responsible for amounts above your limits. Many drivers who drop collision and comprehensive still choose liability limits above the minimum.

Making your decision

Start with your car's approximate value, any loan or lease terms, and the amount of savings you could spend on a replacement. Then switch between the two coverage options in our estimate calculator to see a rough difference for your state. For actual prices, request both versions from an insurer, as explained in how to compare quotes properly. If the price is the main concern, our guide to lowering your premium covers other levers to try, and what affects car insurance rates explains why prices differ.