Ask for a car insurance quote and you will hear two phrases almost immediately: "liability only" and "full coverage." They sound like a small option and a big option. In reality they describe very different jobs, and knowing which job you need done is the first real decision on any quote.
Liability coverage pays for what you do to others
Liability insurance is the foundation of an auto policy. It pays for injuries and property damage you cause to other people when you are at fault in a crash. It does not pay to fix your own car, and it does not pay your own medical bills.
Liability is usually split into two parts:
- Bodily injury liability covers other people's medical costs, lost wages and related expenses when you injure them, plus the cost of defending you if you are sued.
- Property damage liability covers damage you cause to someone else's property, most often their vehicle, but also fences, mailboxes, buildings and the like.
Limits are often written as three numbers separated by slashes, such as 50/100/50. Read in order, that means up to $50,000 for one injured person, up to $100,000 for all injuries in one accident, and up to $50,000 for property damage. The example is only an illustration of the format; your own limits are whatever you choose, within what your state and insurer allow.
Nearly every state requires drivers to carry at least a minimum amount of liability coverage, and the minimums vary widely from state to state. Keep in mind that a state minimum is a legal floor, not a recommendation. A serious crash can produce medical bills and repair costs well above low minimum limits, and anything above your limits can become your personal responsibility.
"Full coverage" is a nickname, not a policy
There is no single product called full coverage. The phrase is shorthand people use for a policy that combines liability with two coverages that protect your own vehicle:
- Collision pays to repair or replace your car after it hits another vehicle or an object, such as a guardrail or a pole, regardless of who was at fault.
- Comprehensive pays for damage that does not come from a collision: theft, vandalism, fire, hail, flooding, falling objects, and hitting an animal.
Both collision and comprehensive usually come with a deductible, which is the part of a covered repair you pay before the insurance pays the rest. Both also generally pay up to the car's actual cash value, meaning what the car was worth just before the loss, not what you originally paid for it.
Because "full coverage" is informal, two people using the phrase may mean different things. When you review a quote, look at the actual list of coverages and limits instead of the label.
Other coverages you will see on a quote
Depending on your state, a policy may include or offer:
- Uninsured and underinsured motorist coverage, which helps when the at-fault driver has no insurance or not enough of it. Some states require it.
- Personal injury protection (PIP), required in no-fault states, which pays medical costs and some lost wages for you and your passengers no matter who caused the crash.
- Medical payments coverage, a smaller, optional medical coverage available in many states.
- Rental reimbursement and roadside assistance, optional add-ons that cover a rental car during repairs or a tow.
When liability-only can make sense
Dropping collision and comprehensive lowers the premium, and for some drivers it is a reasonable choice. It tends to fit when:
- The car is older and worth relatively little, so the most the insurer would pay after a total loss is small.
- You could afford to repair or replace the car out of pocket without real hardship.
- The yearly cost of collision and comprehensive is a large share of what the car is worth.
A simple gut check: if the car were totaled tomorrow, could you handle that loss on your own? If the honest answer is no, coverage for your own vehicle is probably still worth paying for.
When you will likely need more than liability
If you finance or lease your vehicle, the lender or leasing company almost always requires collision and comprehensive for as long as it has an interest in the car. They may also set a maximum deductible. Check your loan or lease paperwork, because dropping required coverage can put you in breach of the agreement.
Newer or more valuable vehicles are also expensive to repair after even a moderate crash, so the case for protecting them is usually stronger.
How to decide
- Start with liability limits. Pick limits that protect what you own and your future income, not just what the law requires.
- Look at the car's value. Estimate what it is worth today and whether you could absorb losing it.
- Check your paperwork. If there is a loan or lease, confirm what coverage it requires.
- Choose a deductible you could pay tomorrow. Higher deductibles lower the premium, but only if you can actually cover them when something happens.
The right setup is the one that fits your car, your budget and your tolerance for risk. Once you know the job you need done, reading a quote gets a lot easier.
This article is general information, not legal, tax, or financial advice, and it does not describe any specific policy. Coverage rules vary by state and by insurer, so always read your own policy documents. Rockin Hot Rod is not an insurance carrier, agency, or broker.
