Difference Between Liability and Full Coverage Car Insurance

Liability and full coverage offer two different types of protection. What's the difference, and which one do you need?

In most states, you’re required by law to carry at least liability car insurance, which covers property damage and injuries you cause to other people. However, buying that minimum coverage may not be enough to protect all of your assets, which is where full-coverage car insurance comes in. “Full coverage” is a general term for a policy that includes liability, collision and comprehensive coverages. Unlike liability coverage, full coverage helps pay for your own damages and injuries after an accident.

Find out more about liability and full coverage:

Liability vs. full-coverage car insurance

Liability coverage only pays for damages that you cause to other people and their property. It offers no coverage for you or your car. Liability coverage is required in almost every state. Full coverage, on the other hand, helps pay for damages to your own car after an accident. It is not required by state law.

Because full-coverage car insurance includes more protection, it’s typically more expensive than liability-only coverage. This is the average cost difference for a minimum liability-coverage policy versus a full-coverage policy:

Rate difference between liability insurance and full coverage
Liability coverage Full coverage
$641 $1,255
Average rates are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.

Our data shows that a full-coverage policy costs almost twice as much as a minimum-coverage liability policy. However, you should consider the protections that each of these coverage options provide and whether they line up with your financial needs before deciding on the cheaper option. If you have a new or expensive car, for example, you should seriously consider purchasing a full-coverage policy.

How liability insurance works

Liability insurance covers the cost of any injuries or property damage caused to others in an accident for which you’re found responsible. Essentially, if you hurt someone or damage someone else’s property, liability insurance covers it. This type of coverage is required in most states, but the minimum requirement varies by state. There are two types of liability coverage:

  • Bodily injury liability: covers medical costs if you injure someone with your car. It’s usually shown as two figures in your policy limits: the coverage limit for one person and the coverage limit for the entire accident.
  • Property damage liability: covers damage to property or another person’s vehicle that you cause with your car.

Limits for liability coverage are listed as three numbers. For example, in California, the minimum coverage limits are 15/30/5. That means drivers need to carry at least $15,000 for bodily injury liability per person, $30,000 for bodily injury per accident and $5,000 for property damage liability.

It’s important to note that liability insurance doesn’t cover any damage to your own car, only damage to another person’s property or bodily injury. If you want coverage for your car, consider a full-coverage policy.

How full coverage works

Although it’s called “full coverage”, this type of insurance doesn’t actually include every coverage option. It includes liability coverage with the addition of collision and comprehensive insurance.

  • Collision insurance: covers damage to your vehicle after a collision with another car or object.
  • Comprehensive insurance: covers damage to your vehicle caused by non-collision accidents like vandalism, natural disasters, fire and theft.

Full-coverage insurance extends protection to your own car. Without comprehensive and collision insurance, you would have to pay for any damage to your car from your own pocket. That can be very expensive. For that reason, it’s recommended that you purchase full-coverage insurance if you can afford it.

Do I need full-coverage car insurance?

Since it costs almost twice as much as liability insurance, you may wonder if you really need full coverage. Whether you need full coverage depends mostly on what kind of car you drive. You may not need full coverage if:

  • Your car is old.
  • Your odometer has more than 100,000 miles.
  • Your car has a market value of a few thousand dollars or less.

If your car has a low market value, it may actually cost more to pay a full-coverage deductible toward repairs than to buy a new car. If your car has a market value of, say, $2,000, it’s entirely possible that you’ll spend close to that amount per year for full coverage. In that case, it’s probably a better choice to save the money you’d spend on full coverage for emergency repairs — or even a new car.

However, if this scenario doesn’t apply to your car, you’ll probably want to add collision and comprehensive insurance to your liability coverage to make it a full-coverage policy. Also, if you’re financing a car, your lender will likely require you to buy full-coverage insurance.

Additional coverage options

If you’ve decided to purchase full-coverage insurance, but you want even more protection, there are plenty of add-ons to consider. Here are some additional coverage options:

  • Personal injury protection (PIP): covers medical costs if you and/or your passengers are injured in an accident. PIP is required in some states.
  • Gap insurance: covers the difference between how much you owe on a leased or financed car and the car’s value if it’s declared a total loss after an accident.
  • Uninsured and underinsured motorist coverage: if you’re the victim of a hit-and-run, or if the driver who causes the accident doesn’t have insurance, or has inadequate coverage limits, this type of coverage can help cover those costs.

Bottom line

The difference between liability insurance and full-coverage insurance is that while liability covers damage you cause to another person and their property, full coverage extends protection to your own car. Opting for a full-coverage policy may raise your rates significantly.

Liability insurance is required by law in most states, but full coverage is optional, although if you lease or loan your car, it may be required. However, it’s recommended that you purchase full coverage to protect your car, especially if it’s new.


Average car insurance rates were compiled from more than 100,000 quotes across the country. Each state rate is based on quotes for every available company across 20 random ZIP codes. Our base driver profile is a 35-year-old male who drives a 2012 Honda Accord LX. He has an excellent credit score and a clean driving record.

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