Car insurance: liability only or full coverage?

Q: Car insurance: liability only or full coverage?

Liability pays for the injuries and damage you cause to other people. It does not pay to fix your own car. Liability is required in most states, and the minimums are set by each state. Collision pays for damage to your car in a crash, even when you caused it. Comprehensive pays for damage that isn't from a crash, like theft, fire, weather or hitting an animal. Together, those two are what people call "full coverage." If you have a car loan or lease, your lender usually requires both. If you own the car outright, the choice mostly depends on what the car is worth and how much you could pay yourself if it were wrecked or stolen tomorrow.

"Full coverage" isn't one product. Once you know what's inside, the choice gets much easier.

The answer in 2 lines. Liability pays for the injuries and damage you cause to other people. It does not pay to fix your own car. Liability is required in most states, and the minimums are set by each state. Collision pays for damage to your car in a crash, even when you caused it. Comprehensive pays for damage that isn't from a crash, like theft, fire, weather or hitting an animal. Together, those two are what people call "full coverage." If you have a car loan or lease, your lender usually requires both. If you own the car outright, the choice mostly depends on what the car is worth and how much you could pay yourself if it were wrecked or stolen tomorrow.

The 4 steps

Find out what your car is worth today. After a total loss, collision and comprehensive pay up to the car's actual value, minus your deductible. They don't pay what you originally paid for it.
Ask yourself what you could cover alone if the car were destroyed or stolen tomorrow, and still get to work.
Read your loan or lease contract. If you still owe money on the car, the lender will usually require collision and comprehensive.
Compare quotes line by line: liability limits, deductibles for collision and comprehensive, uninsured motorist coverage, and medical coverage (PIP or medical payments).

What each coverage pays, in general

Coverage	What it pays for	Required?
Liability (bodily injury and property damage)	Injuries and damage you cause to others	In most states, with state minimums
Collision	Your car, after a crash with a car or an object, a pothole, or a rollover	Optional by law, but usually required by a lender
Comprehensive	Your car, for damage that isn't from a crash: theft, fire, weather, an animal	Optional by law, but usually required by a lender
Uninsured / underinsured motorist	Your losses when the at-fault driver has no insurance, too little, or drives off	Required in some states
PIP / medical payments	Medical bills for you and your passengers; PIP can also cover lost wages	PIP is required in "no-fault" states

Insurers can use different names and limits. Your policy's declarations page and policy wording are what count.

How to choose

Newer, valuable, or financed car: collision and comprehensive are usually the sensible choice, and often required. If you owe more than the car is worth, ask about GAP insurance. It covers the difference between your loan balance and the car's value after a total loss.
Older car you own outright: the NAIC suggests considering dropping or reducing physical damage coverage (collision and comprehensive) on older vehicles. Compare what you pay each year with what the car is worth after the deductible.
Parked outside where theft, hail or deer strikes are common: you could keep comprehensive even if you drop collision. Ask for a quote for each option.
Little savings: if a wrecked car would leave you unable to get to work, liability only is a real risk.
In every case: look at the deductibles. A higher deductible lowers the premium, but only choose one you could actually pay.

What not to do

Comparing only the price without reading the deductibles, limits and exclusions.
Assuming "full coverage" pays for everything. Rental cars, towing and medical bills are often separate options.
Paying for collision year after year on a car worth very little, without checking again.
Dropping collision or comprehensive on a financed car without telling your lender. This can break your loan contract.
Buying only your state's minimum liability limits without thinking about what a serious crash could cost.

In your state

The rules come from your state. Each state sets its own required coverages and minimum limits, and decides whether you need PIP or uninsured motorist coverage. Your state insurance department explains them. You can find yours on the NAIC Insurance Departments page: choose your state from the menu to get its contacts or file a complaint.
Getting your deductible back when you weren't at fault: your insurer can try to recover what it paid from the at-fault driver's insurer. This is called subrogation. In Washington, the insurer must include your deductible in that demand, and if you were partly at fault you get back only part of it (Washington Insurance Commissioner). In California, the insurer must tell you whether it will pursue subrogation, so you can go after the deductible yourself if it won't (California Department of Insurance).
Not at fault, but no collision coverage? You can file a claim with the other driver's liability insurer. In Texas, the state explains how to do this (Texas Department of Insurance).

Good to know

Liability insurance follows strict state rules. Driving without the required insurance can bring fines and a license suspension, depending on your state.
Uninsured motorist coverage can pay for your losses after a hit-and-run. Liability-only coverage never pays to repair your own car.
After any crash, see our guide on what to do at the scene of a fender bender.
If your insurer denies or underpays a claim, file a written complaint with it first, then contact your state insurance department.

In Columbus, Ohio, Denise drives a 15-year-old sedan she paid off years ago. She has had collision and comprehensive since the day she bought it. When she compares her yearly premium with the car's value minus her deductible, she sees that a collision claim would pay her very little. She drops collision, keeps comprehensive because she parks on the street and deer are common on her commute, and raises her liability limits with part of the savings.

A made-up story, for illustration.

Bobby

Sources, verification, confidence

Verified on November 6, 2026, for the United States. Confidence: high for what each coverage pays (NAIC); medium for state rules, which vary and can change. Check your own state's insurance department. This guide gives general rules and doesn't replace reading your policy. Bobby doesn't recommend any insurer or policy.