Liability vs. Full Coverage Car Insurance: Which Do You Need?
This content is for general information only and is not legal, financial or insurance advice. Coverage, rules and prices vary by state and insurer. Always confirm details with a licensed agent or your policy documents.
"Full coverage" is a popular phrase, but it is not an official policy type. It usually means liability coverage combined with collision and comprehensive. Here is what each piece does so you can pick what fits your situation.
Liability coverage
Liability pays for injuries and property damage you cause to other people in an at-fault accident. It does not pay for your own car. Nearly every state requires a minimum amount, but state minimums can be low compared with the cost of a serious accident, so many people choose higher limits.
Collision coverage
Collision pays to repair or replace your vehicle after a crash, regardless of fault, minus your deductible.
Comprehensive coverage
Comprehensive covers non-collision events such as theft, vandalism, fire, hail, falling objects and animal strikes.
Other coverages to consider
- Uninsured/underinsured motorist: protects you if the other driver has no or too little insurance.
- Medical payments or personal injury protection: helps with medical costs for you and your passengers.
- Rental reimbursement and roadside assistance: inexpensive add-ons that can be very convenient.
- Gap coverage: useful if you owe more on a loan or lease than the car is worth.
Which should you choose?
| Situation | Typical approach |
|---|---|
| New or financed car | Liability + collision + comprehensive (lenders usually require it) |
| Older car with low value | Liability, and possibly drop collision if the cost exceeds the car's value |
| Significant savings or assets | Higher liability limits and possibly an umbrella policy |
For ways to cut the price of any of these options, see how to lower your car insurance premium.