Liability vs. Full Coverage Car Insurance: What's the Difference?

It's more than just the cost of coverage

A woman is standing in front of a minor accident. She's talking on her phone.
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If you have a license and drive often, you're required to purchase auto insurance in most states. Shopping for a policy can be confusing, though. Before choosing an insurance carrier, it's a good idea to have the type of coverage you want in mind.

There are two main types of car insurance coverage: liability coverage and full coverage. While full coverage insurance premiums may be more expensive, this type of coverage will help protect you more fully in a variety of situations. Liability coverage, on the other hand, is more limited in what it covers.

Learn more about liability and full coverage, and the differences between the two.

What's the Difference Between Liability and Full Coverage Car Insurance?

Liability Coverage Full Coverage
Less expensive car insurance premiums More expensive car insurance premiums
Usually includes bodily injury liability and property damage liability Usually includes all liability coverage as well as comprehensive, collision, and medical coverage/personal injury protection.
Doesn't cover your own injuries or property damage in an accident; it only covers the other party when you are liable Covers injuries to you and your passengers as well as damage to your car during an accident
Doesn't cover anything related to collisions with objects or damage due to theft, vandalism, or weather Includes coverage for damage to your vehicle that isn't due to an accident, such as losses due to theft, vandalism, or weather
Basic, or "minimum" car insurance that is required in most states More than the minimum coverage required

Coverage Included

If you're liable for something, that means that, legally speaking, you are responsible for the incident. The person found liable is responsible for fixing the resulting damage.

In auto insurance, liability coverage helps pay for damage if you're found to be responsible for an accident. Auto insurance policies include two types of liability coverage:

  • Bodily injury liability: This covers the medical expenses of someone injured in an accident you caused.
  • Property damage liability: This covers damage to the other party's property in an accident you caused, including any other vehicles.

Liability coverage is some of the least expensive car insurance you can get, but that's because it doesn't provide as much coverage in an accident.

Full coverage, on the other hand, includes multiple types of coverage. These policy types typically include liability coverage and these additional types of coverage:

  • Comprehensive coverage: This covers damage to your vehicle that isn't due to an accident. For example, it covers losses due to theft, vandalism, and storm damage.
  • Collision coverage: This covers damage to your vehicle from a collision with another vehicle or an object, like a tree or guardrail.
  • Medical coverage or personal injury protection: This covers injuries to yourself and any passengers in your vehicle.

Full coverage costs you more in monthly insurance premiums, but it can save you a substantial amount of money in the event of an accident,

Important

Liability coverage doesn't cover your injuries or property damage to your vehicle. It only covers other parties if you're found liable for an accident.

Coverage Specifics

Liability coverage is sometimes referred to as BI/PD or PL/PD coverage. BI refers to covering the cost of bodily injuries, PL refers to your personal liability in an accident, and PD refers to covering the costs of property damage. These are the critical components of basic car insurance coverage.

When you purchase an insurance policy, you choose limits for property damage liability, bodily injury liability per person, and bodily injury liability per accident. These are the limits on how much your insurance company will pay. This is usually expressed as a set of three numbers. For example, if you have 50/150/50 coverage, that breaks down to:

  • Up to $50,000 in bodily injury liability coverage per person
  • Up to $150,000 in bodily injury liability coverage per accident
  • Up to $50,000 in property damage liability coverage

Full coverage, on the other hand, includes liability coverage—and it works the same as above. The difference, though, is that it also includes other, additional types of coverages that will vary based on your insurance company and preferences.

Tip

It's a good idea to talk to your insurance agent about what coverage you should have. If you're found liable in an accident and cause more damage than your limit, you’ll be responsible for the remaining balance.

Coverage Requirements

Some sort of liability coverage is required in most states. Two exceptions are New Hampshire and Virginia, which don't require car insurance at all.

Full coverage isn't required in any state—but there's one situation where it might not be optional. If you're financing or leasing a vehicle, your lender may require you to have comprehensive and/or collision coverage at the very least.

Which Is Right for You?

Liability coverage is the minimum amount of insurance required, while full coverage protects you in many more situations. Think about your driving habits; also, consider your ability to pay out-of-pocket in the worst-case scenario of an accident. Choosing minimum coverage could put you on the hook for tens of thousands of dollars in damages.

Let's say you run a red light and plow into the side of a new sports car. Your property damage liability limit is $10,000, but the car is totaled and the replacement cost is $50,000. That means you're responsible for the $40,000 difference. Plus, you wouldn't be covered for any damages to your own vehicle.

The situation might look different if you were to have full coverage instead. While you still may have out-of-pocket costs, they might not be as high. It just depends on your policy deductibles. You're also responsible for any costs that exceed your coverage limits. However, in the above scenario, your full coverage would help cover any costs associated with damage to your own vehicle as well as any of your injuries sustained.

Other Types of Coverage to Consider

Roadside assistance, uninsured and underinsured motorist coverage, gap insurance, towing, OEM endorsements, full glass coverage, and car rental are all types of coverage that you'll need to purchase separately.

Uninsured motorist coverage is also important because it helps to cover accidents caused by an uninsured, underinsured, or hit-and-run driver. Some states require this coverage, but if your state doesn't, it's worth considering.

Note

If you're buying a new vehicle and you haven’t made a substantial down payment, gap coverage is something you should consider—and might even be required to purchase. Gap coverage helps pay the difference between the depreciated value of your vehicle and your loan or lease balance.

The Bottom Line

While liability coverage may be the cheaper car insurance option, keep in mind that it won't help cover you in as many situations as full coverage will. Liability coverage only pays for damage and/or injury to the other party in an accident, and only up to a certain, pre-determined limit.

Full coverage, on the other hand, will help pay for injuries and property damage in a variety of situations—even those that aren't car accidents, such as theft, vandalism, or weather events.

Consider your driving habits and ability to pay the costs associated with an accident when deciding whether liability or full coverage is right for you.