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Liability-only vs. full coverage car insurance

Updated Jun 01, 2024
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Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

Key takeaways

  • Liability-only car insurance provides coverage for injury and damages you may cause, while full coverage adds coverage for damage to your vehicle.
  • Each state has different requirements for the types and amounts of coverage that a driver is required to have in order to legally drive in that state.
  • The amount of auto insurance you need (beyond the minimum required) depends on your overall financial situation, your comfort level for financial risk and whether your vehicle is financed or leased.

Car insurance isn’t a one-size-fits-all product. Some drivers opt for liability-only insurance; others want the added financial protection of a full coverage policy or be required to carry this coverage by their lender. While the meaning of the terms “full coverage” and “liability-only” can vary depending on your state and carrier, deciding between these coverage types is essential to building the best insurance policy for your needs. Bankrate can help you explore your options and understand which type of coverage best meets your personal insurance needs. 

Liability-only vs. full coverage car insurance costs

Carriers analyze many rating factors to determine your car insurance rate. In most states, these include your age, gender, driving history and even your credit history. The type of coverage you choose — liability-only or full coverage — also significantly impacts how much your premium will be.

A liability-only insurance policy pays for injuries or property damage you cause in an at-fault accident — up to the limits you carry on your policy. Full coverage (which usually includes comprehensive and collision coverage) offers financial protection for your vehicle in addition to the benefits of liability insurance. Generally, liability-only car insurance is significantly cheaper than full coverage since it provides less financial protection.

Cost by state

The state you live in significantly impacts your car insurance rates. Each state has its own car insurance regulations, crash statistics, weather patterns, crime rates and cost of living variations, which all impact the price of a car insurance policy. For example, a minimum coverage policy in Florida (as of May 2024) costs an average of $1,091 per year, while a minimum coverage policy in Maine averages just $398. These rate differences can be attributed, in part, to Florida's PIP coverage requirements, high number of uninsured drivers and frequent extreme weather conditions.

Bankrate insight

Even within each state, drivers in different areas can see drastically different rates. In addition to personal rating factors, considerations like traffic density, vehicle crime rates, regional weather and local cost of living differences will affect your premium. In most states, insurers evaluate these risks by looking at your ZIP code. Drivers in dense urban areas with more accidents, more thefts and higher costs of living tend to see higher rates, while rural drivers may see relative savings. If you've recently moved, it could be beneficial to shop around and compare rates, especially if you see a rate increase at renewal.

Cost by age

Younger drivers typically pay higher car insurance rates because they have less experience behind the wheel and are more likely to engage in risky driving behaviors. This is true for full and minimum coverage policies unless you live in Hawaii or Massachusetts, where age is banned as a car insurance rating factor (although carriers in Massachusetts can consider how many years you've been licensed for). Young drivers typically save money by remaining insured on their parents' policy and drivers under the age of 18 usually cannot purchase their own insurance policy.

Average annual full coverage premium
$4,974
Average annual minimum coverage premium
$1,520
Average annual full coverage premium
$6,405
Average annual minimum coverage premium
$1,921
Average annual full coverage premium
$2,930
Average annual minimum coverage premium
$815
Age 40
Average annual full coverage premium
$2,311
Average annual minimum coverage premium
$640
Average annual full coverage premium
$2,080
Average annual minimum coverage premium
$590
*Rates are for a teen driver and married parents on the same policy.

Cost by gender

Women generally pay less for full coverage car insurance due to a lower likelihood of engaging in risky driving behaviors that could result in claims. However, California, Hawaii, Massachusetts, Michigan, North Carolina and Pennsylvania ban the use of gender as a rating factor. In these states, your gender should not affect your car insurance premium. 

Additionally, you may find that rates vary more widely based on other rating factors. A 24-year-old woman may pay more than a 40-year-old man since she has fewer years of driving experience. Or, a woman who lives in New York City could pay higher premiums than a man living in rural Iowa. Statistically, she may present a greater risk to her insurance company by living and driving in a highly-congested area. 

Male
Average annual full coverage premium
$2,320
Average annual minimum coverage premium
$633
Female
Average annual full coverage premium
$2,302
Average annual minimum coverage premium
$647

Bankrate insight

Although men usually pay higher car insurance rates than women, our analysis of average premiums from Quadrant Information Services shows that this gap tends to narrow the older you get. Older men may be less likely to engage in risky driving behavior compared to their younger counterparts. Additionally, the Insurance Institute for Highway Safety (IIHS) shows a decreasing rate of male traffic fatalities in recent decades. The National Highway Traffic Safety Administration (NHTSA) also found that enhanced safety features in new vehicles are helping to lower the risk of dying in a traffic accident for women.

Cost by insurance company

Every car insurance carrier has its own proprietary method for setting rates, so your quoted rates will vary between providers. Finding the best car insurance company for your needs generally involves knowing what coverage amount best suits you, shopping around and comparing quotes. Below, we’ve included average premiums provided by analytics company Quadrant Information Services for some of the largest car insurance companies by market 

Company Average annual full coverage premium Average annual minimum coverage premium
$2,624
$827
$1,984
$552
$2,055
$649
$2,892
$861
$2,016
$561

Bankrate insight

Full coverage insurance costs, on average, 261 percent more than minimum coverage, based on rate data from Quadrant Information Services. For many drivers, the added cost may be worthwhile based on the cost to replace or repair a car out of pocket following a severe or total loss. This consideration is increasingly important as supply chain issues, technician shortages, inflation and advances in auto technology drive up the cost of vehicle repairs. Additionally, if your vehicle is leased or financed, carrying full coverage may be a requirement from your lender until the vehicle is paid off. 

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Advertising disclosure
This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions.

Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

Liability-only vs. full coverage insurance

Simply put, liability-only car insurance is a type of policy that only provides coverage for injury and damages you cause, not damage your car sustains. Full coverage, on the other hand, builds on liability-only and adds additional coverage, including coverage for damage to your vehicle from collisions as well as non-collision incidents such as storms and fires. In the U.S., the average cost of car insurance for minimum coverage — the lowest coverage level of insurance that you can purchase — is $637 per year, while full coverage costs an average of $2,299 per year.

Keep in mind, though, that your auto insurance needs will likely change over time. You may find that full coverage is the best option for you now, while in the future, you may be more apt to choose liability-only as the value of your vehicle decreases or your financial situation shifts. Reassessing your needs regularly, especially if you’ve recently gone through a life change, can help you align your coverage with your circumstances. Below, we delve deeper into the differences between liability-only and full coverage to help you determine which is best for you as you gather car insurance quotes.

Liability-only car insurance

Liability car insurance coverage is the part of your policy that pays for the injuries and damages you cause to someone else in an at-fault auto accident. Most states require drivers to carry at least a minimum car insurance coverage limit, often called “minimum coverage.” However, you can buy higher liability limits than required by your state and still have a “liability-only” policy.

Liability coverage is broken down into two parts:

  • Bodily injury liability: This coverage pays for the injuries you cause to another party in an at-fault accident.
  • Property damage liability: This portion of your liability coverage pays for the damages you cause to another’s property, such as another vehicle, a fence or a building.

Liability coverage is often listed as split limits in a "bodily injury per person / bodily injury per accident / property damage per accident" format. This means that your policy will cover up to different amounts for injuries to a single person, injuries to multiple parties from a single accident, and property damage from a single accident. However, your liability coverage may also be a “combined single limit,” meaning it’s one number that can be used flexibly to cover the damages and injuries you cause.

Some states also require other coverage types as part of their minimum coverage requirements, including:

  • Personal injury protection (PIP): This coverage pays for your medical bills and your passengers’ medical bills if you are injured in an accident, regardless of fault. PIP may also pay for lost wages and the costs for household services you can’t perform due to injuries. In no-fault states, PIP is required.
  • Uninsured and underinsured motorist: These two coverage types pay for injuries you sustain if you are hit by a driver who does not have insurance or does not have enough insurance to cover your bills. This also may provide coverage if you are a pedestrian hit by an uninsured motorist or a victim of a hit-and-run accident.
  • Medical payments: Although only required in a few states, medical payments coverage is similar to PIP. It pays for your injuries and the injuries to your passengers regardless of fault. However, medical payments coverage does not cover lost wages or household services like PIP.

Takeaway: You must purchase a car insurance policy with at least your state’s minimum required coverage types and limits in states where car insurance is required. However, you can purchase higher liability limits and other coverage types, such as medical payments, and still have a “liability-only” policy.

Full coverage car insurance

Although there is no industry standard definition, full coverage car insurance usually refers to a policy that has all the state-required coverage types as well as comprehensive and collision coverage, which add coverage for damage to your vehicle. While it’s possible to have a full coverage policy with low liability limits, many full coverage policies have higher limits for liability coverage to offer more robust coverage and greater financial protection. 

In addition to state minimum coverage requirements, full coverage policies typically include:

  • Collision: This coverage pays for your vehicle’s damages from collisions, such as hitting another vehicle, tree or building. Collision coverage will help cover your vehicle’s repairs in a covered claim, regardless of fault.
  • Comprehensive: Often called “other-than-collision” coverage, comprehensive pays for non-collision damages, such as damages caused by fire, theft, weather, vandalism or striking an animal.

You may also be able to add some additional coverage types, known as endorsements, to full coverage policies:

  • Rental reimbursement: This coverage will pay for a rental car if your vehicle is not driveable and is being repaired or replaced by a claim covered under your comprehensive or collision coverage. There is generally a per-day coverage limit and a total maximum amount of coverage limit.
  • Roadside assistance: This endorsement pays for service calls needed for your vehicle, like a tow, jump start or tire repair service.
  • Gap insurance: Gap coverage is designed to pay the difference between your new car’s actual cash value and the amount you owe on a loan or lease. If your vehicle is totaled or stolen and you owe more than the car is worth, gap coverage pays the difference.

Takeaway: A full coverage policy is generally more expensive than a liability-only policy, but it provides more financial protection and often has higher liability limits. Full coverage is often required when a vehicle is financed or leased. Additionally, you must have full coverage to qualify for several common endorsements, including car rental reimbursement coverage and roadside assistance.

Do I need liability-only or full coverage car insurance?

Deciding how much car insurance you need is pivotal in finding the right policy for you. Too little coverage could leave you with high out-of-pocket bills in the event of an accident and cause financial hardship. Too much coverage, however, and your budget may be strained by your premium payment. So, how do you know how much coverage is right for you?

First, if you have a loan or lease on your vehicle, you’ll likely be required to buy full coverage as a condition of the financing, which could be an easy way to narrow down your options. If you own your vehicle outright, you can choose between liability-only and full coverage policies. If your vehicle is older (valued at less than the cost of a full coverage policy) or you otherwise feel that you have enough money to pay for damage out of pocket, you may want to choose liability-only. However, if paying for vehicle damage out of pocket would cause you and your family financial distress, full coverage may be the better option.

Even high-income individuals often choose a robust insurance policy over driving with liability-only coverage because the cost of a policy is nearly always less than the cost of replacing a vehicle.

Most insurance professionals recommend you consider buying higher liability coverage limits than your state’s minimum, even if you choose not to have comprehensive and collision coverage on your vehicle. Higher liability limits mean greater financial protection for you and your family in an at-fault accident. If you are unsure how to determine the right coverage amount, you always have the option of working with a licensed insurance agent for more guidance.

Frequently asked questions

Methodology

Bankrate utilizes Quadrant Information Services to analyze June 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a single, 40-year-old male and female driver with a clean 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 base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually. 

These are sample rates and should only be used for comparative purposes. 

Age: Rates were calculated by evaluating our base profile with the ages 18-60 (base: 40 years) applied. Depending on age, drivers may be a renter or homeowner. Age is not a contributing rating factor in Hawaii and Massachusetts due to state regulations.

Teens: Rates were determined by adding a 16-year-old teen to their 40-year-old married parents' policy. The rates displayed reflect the total cost of a driver this age added to their parents’ policy. 

Gender: The following states do not use gender as a determining factor in calculating premiums: California, Hawaii, Massachusetts, Michigan, North Carolina, Pennsylvania.

Written by
R.E. Hawley
Senior Writer, Insurance
R.E. Hawley is a senior writer for Bankrate. Prior to joining Bankrate’s insurance editorial team in 2024, they worked as senior writer for a popular car ownership and insurance comparison app, leading a team of over a dozen writers in creating customer-focused financial advice content on topics ranging from insurance to vehicle reliability and auto loan refinance. R.E. holds a personal lines insurance license in the state of New York.
Edited by Senior Editor, Insurance
Reviewed by Director of corporate communications, Insurance Information Institute