Liability-only car insurance is a type of auto insurance that only includes coverage for damages and injuries you cause to another party. This type of coverage is sometimes called PLPD, which stands for personal liability and property damage — the two types of coverage included on liability-only policies. Liability-only insurance can range from state minimum levels to relatively high limits, but never includes coverage for damage to your own vehicle.
Understanding the difference between minimum coverage and liability coverage and knowing what you can expect to pay for this type of insurance could help you make an educated decision about your car insurance policy.
Cheapest liability car insurance
Based on our research, the companies that offer the cheapest minimum coverage nationwide are Auto-Owners and USAA, followed closely by Amica, Erie and Geico. While these average rates are for cheap liability car insurance, based on 2021 rates from Quadrant Information Services, keep in mind that minimum coverage requirements and costs will vary based on the state where you live.
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Finding cheap car insurance is a priority for many drivers. Getting quotes from several carriers can be helpful, as it allows you to compare the price for the same coverage. And although minimum coverage is often one of the cheapest liability insurance policies available, due to its low limits, most insurance experts recommend that you purchase higher liability coverage limits if you can afford to. If you cause an accident and the damages and injuries exceed your liability coverage limit, you will be responsible for paying the overage out of pocket. Depending on the extent of the accident, out-of-pocket costs can end up being thousands of dollars.
However, when choosing an insurance company, there are other factors to consider in addition to price. You may also want to review a company’s customer satisfaction scores, coverage options, discounts and digital tools. Everyone has different wants and needs when it comes to insurance, so getting quotes from several carriers might help you find the right policy for you.
What is minimum coverage?
Minimum coverage refers to carrying only the minimum amount of car insurance coverage required by your state. This required coverage can vary, but almost always includes bodily injury liability coverage and property damage liability coverage, which make up liability-only insurance.
Your policy will not truly be “liability only” if you have added PIP coverage, but you still will not have coverage for your own vehicle. Liability-only coverage is only an option if you own your vehicle outright. If you have a loan or lease, your lender likely requires you to have full coverage. It is also worth noting that, like “full coverage,” “liability-only coverage” is not an industry-standard term. Some companies may consider medical payments or PIP to be a part of a liability-only policy, especially if your state requires them.
Cost of liability-only car insurance
Each state has unique laws and risk levels that affect the cost of liability car insurance. Because of this, buying only minimum coverage could save you more money in some states than it may in others. For example, the average annual cost of car insurance for minimum coverage in Maine is $294, which saves $671 compared to the cost of full coverage. But the annual cost of minimum coverage in Louisiana is $975, over $1,700 cheaper than full coverage in the state.
While full coverage insurance does usually cost more than minimum coverage, it provides a greater level of financial protection. Full coverage includes comprehensive coverage and collision coverage, which cover damage to your vehicle — something that is not included in minimum coverage.
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How much cheaper is liability vs. full coverage?
The price difference between liability and full coverage insurance will depend on how much liability coverage you buy. Liability auto insurance is not one-size-fits-all. You can purchase different levels of coverage that provide you with more or less financial protection. State minimum policies provide very minimal protection, while a policy with higher limits gives you more. If you cause an accident, a liability-only policy will only pay up to your policy’s limited allowance for the injuries and damages you cause. The higher your limits, the more coverage you have and the more your insurance will likely cost.
Keep in mind that liability auto insurance never covers damage to your car. To cover damages to your car, you need full coverage car insurance, which covers damage to your vehicle from covered collisions and other events, like weather or hail. The difference in price is stark when you compare average full coverage rates with average minimum coverage rates. You might pay almost $975 more for full coverage than a minimum coverage policy, depending on the insurance company you choose. However, a liability-only policy with limits higher than the state minimum will likely cost more than a minimum coverage policy. In that case, the price difference may not be as significant.
Average annual cost of minimum coverage insurance vs. full coverage
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If your goal is to purchase cheap liability car insurance, you might be tempted to buy just your state’s minimum limits. While this could help keep your premium down, it could cost you more money in the long run. If you cause an accident and the damages are higher than your insurance limits, you’ll be responsible for the difference out of pocket. Full coverage will typically cost quite a bit more than minimum coverage, but higher limits and adding comprehensive coverage and collision coverage could save your finances a lot of stress. If you’re involved in a collision with significant damages, not having enough coverage could force you to pay thousands of dollars out of pocket.
Even if your budget is tight, you might want to get an insurance quote for a few different levels of liability coverage. You could be surprised that higher limits don’t always cost much more, and you might even be able to afford full coverage.
Things to consider when purchasing liability-only car insurance coverage
Unless you live in New Hampshire or Virginia, where car insurance is not required, you will need to purchase at least the minimum car insurance limits to drive legally in your state. However, you can purchase higher liability limits and still have liability-only car insurance. Higher limits can better protect your finances.
For example, imagine that you cause an accident in Mississippi, where you carry just the required 25/50/25 minimum limits. This means that you have $25,000 in bodily injury liability coverage per person, $50,000 in bodily injury liability coverage per accident and $25,000 in property damage liability coverage. If you cause $100,000 in total injuries, your policy will still only pay up to $50,000. You will be responsible for the other $50,000. And if you total the other party’s car to the tune of $30,000, you’ll have to pay that extra $5,000 out of pocket, too.
If you had higher limits, say 100/300/100, your policy would have covered the entire $100,000 injury costs and the full $30,000 vehicle repair costs. Higher limits may cost more, but they could help you maintain financial stability if you cause an accident.
Liability-only coverage might be a good fit for you if:
- You own your car outright: If you have a loan or lease on your vehicle, you will very likely be required to carry full coverage, so liability-only coverage is probably only an option if you own your car in full.
- Budget is your primary concern: Because full coverage provides greater financial protection in the form of coverage for damage to your car, it is generally more expensive than minimum coverage or liability-only coverage.
- Your vehicle is not worth much: If your vehicle is older and does not have a high value, it may not make financial sense to pay for full coverage.
- You are not concerned about vehicle damage: If you are not worried about damage to your vehicle and do not think you would repair damages, liability-only might be a good choice.
- You have the finances to repair or replace your car: If you own your car outright and have the finances to repair or replace it if it is damaged, without putting a significant strain on your financial health, liability-only coverage could be a viable option.
If you are unsure if liability-only coverage is right for you, working with an agent could be helpful. An agent can listen to your situation and help you choose coverage that is appropriate.
Frequently asked questions
What company offers the cheapest liability-only car insurance?
Our research found that Auto-Owners, USAA, Amica, Erie and Geico offer the cheapest car insurance for liability-only minimum coverage. If you are looking for higher limits in a liability-only policy, other companies may have cheaper rates. You might want to get quotes from several car insurance companies to compare the price for the same coverage.
Is it enough to carry the minimum liability that my state requires?
To drive legally in any given state, except New Hampshire & Virginia, you only need to purchase the minimum required coverage limits. However, many insurance experts suggest that you purchase higher liability limits. Even a moderate accident can cause thousands of dollars in property damage and even more in medical expenses. If a lawsuit results from the accident, you may find yourself facing significant financial difficulties from high medical bills and other damage expenditures. Talking to a licensed agent about your financial situation may help you to determine how much coverage to purchase. You’ll also want to remember that if your vehicle is financed, your lender will likely require you to have full coverage.
Is liability-only coverage cheaper than full coverage?
It depends. If you compare a liability-only policy with state minimum limits against a full coverage policy with higher limits, then the liability-only policy is probably cheaper. However, you can have a full coverage policy with low liability limits or a liability-only policy with high limits, and that will affect the price.
Other factors go into your premium, like your driving record. A state minimum policy could be more expensive for a driver with numerous accidents and tickets than a full coverage policy is for a driver with a clean record. Car insurance policies come with numerous options to be personalized, which affects price. The best way to figure out how much you’ll pay for coverage is to get quotes.
How does auto liability work?
You may want to look into how auto liability works while you’re in the process of choosing your insurance coverage types. Auto liability insurance pays for damages and injuries that the other party incurs during a car accident. Choosing the right amount of liability coverage is important because the costs associated with car accidents can add up between medical costs and repair bills. To choose the right amount of liability insurance, you may want to speak to a local insurance agent who can help you decide how much coverage is right for you.
Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a cleaning driving record, good credit and the following full coverage limits:
- $100,000 bodily injury liability per person
- $300,000 bodily injury liability per accident
- $50,000 property damage liability per accident
- $100,000 uninsured motorist bodily injury per person
- $300,000 uninsured motorist bodily injury per accident
- $500 collision deductible
- $500 comprehensive deductible
To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our sample drivers own a 2019 Toyota Camry, commute five days a week and drive 12,000 miles annually.
These are sample rates and should be used for comparative purposes only. Your quotes may be different.