In the insurance industry, you often hear about liability and full coverage. It can be hard to know what it all means. Especially since full coverage includes liability insurance as a package deal. As a driver, you should know what they are and how they differ. This knowledge comes in handy when you’re shopping for car insurance.
This article will explain the differences between the two auto insurance “coverage types.” We’ll define each one and break down what they cover. You’ll also find out whether you may need either one. Finally, we’ll answer some frequently asked questions.
Differences Between Liability Insurance and Full Coverage
Below is a table listing some of the main differences between both terms. You’ll notice that full coverage includes liability but is not a type of policy itself. On the other hand, liability is a form of coverage that most states require you to have on your policy.
| Liability Insurance | Full Coverage |
|---|---|
| Is a type of car insurance | Not an actual type of insurance |
| Is usually a state requirement | Not a state requirement, but may be required by lenders |
| Protects drivers from paying the other party’s damages | Includes collision |
| Doesn’t cover your own car’s damages | Includes comprehensive |
| Doesn’t cover your own injuries | Covers injuries in some cases |
| Covers both property damage and bodily injury | Includes liability |
What Is Liability Insurance?
Liability protects you if you’re at fault in an accident and must pay the damages. It will pay for the other driver’s expenses so you don’t have to. Most states require you to have it. Check out our liability insurance coverage article to see a more in-depth guide.
What Does It Cover?
Liability insurance covers a few vital things. Remember that it only kicks in when you’re at fault in an accident. Here’s a list of what it covers:
- Property damage to the other person’s car
- Other property damage (light posts, streetlights, buildings, etc.)
- Bodily injury that the other party sustains e.g., medical bills, lost wages, EMT fees, etc.
What Doesn’t It Cover?
Liability insurancec doesn’t cover any damage to your car or any injuries you may have after an accident. It only protects you from having to pay in full for the other person’s damages/injuries. Coverages like MedPay and personal injury protection (PIP) will cover your injuries. Also, collision would cover damages to your car in an at-fault accident.
What Is Full-Coverage?
Full-coverage is a term that providers often use when they’re talking about an auto insurance policy that includes, at a minimum, the following:
- Collision
- Comprehensive
- Liability
You’re not just limited to the three options above. Other options are available as well, such as:
- Medical payments (MedPay)
- Personal injury protection (PIP)
- Guaranteed asset protection (Gap)
- Uninsured and underinsured motorist (UM and UIM)
What Does It Cover?
Since there technically isn’t a full-coverage product, there are no protections to mention. But, the three insurance products that it includes protect you from:
- Collisions with other cars, even if your car is sitting in a parking lot.
- Theft
- Vandalism
- Natural disasters and other random events that damage your car
- Accidents where you’re liable to pay for damages/injuries
Who Needs One Over the Other?
Most states require you to have at least some amount of liability. This is because it, at the very least, protects the other party from having to pay for any damages. Be sure to check your state’s laws to see that you have the proper amount of insurance.
Full coverage insurance is usually a requirement if you’re financing your car. Your lender will normally require you to buy it. They do this to protect their financial stake in your car. If you were to buy your car outright, you wouldn’t need to worry about this. Be aware of this if you’re thinking of leasing or financing a car.
Besides state requirements, it’s a good idea to protect yourself from as many risks as possible. Not doing so could result in you having to shell out loads of cash out of pocket to pay for an unforeseen accident.
US Average Liability Insurance and Full-Coverage Rates
The table below includes average national liability insurance and full-coverage rates side-by-side ranging from 2012 to 2019. It’s worth noting that this is the most recent actual cost data we can gather from the Insurance Information Institute (III).
| Year | Liability Insurance | Full-Coverage |
|---|---|---|
| 2012 | $503.88 | $814.99 |
| 2013 | $518.49 | $841.23 |
| 2014 | $530.51 | $866.31 |
| 2015 | $538.73 | $889.01 |
| 2016 | $566.51 | $935.80 |
| 2017 | $611.12 | $944.36 |
| 2018 | $644.11 | $1,056.55 |
| 2019 | $650.35 | $1,070.47 |
As you can see in the table above, liability accounts for nearly two-thirds of the total cost of a full coverage insurance policy. In addition, the price of each type of coverage grew steadily between 2012 and 2019. In that period, liability expenses rose from $518.49 to $650.35, or 22.5%. Full-coverage premiums rose even faster, growing from $814.99 in 2012 to $1,070.47 by 2019, or 23.8%.
Average Rates by State
Where you call home is one of the most important auto insurance rate factors. The reason is that your ZIP code reveals to insurers the risks associated with your area. Liability and full coverage almost always cost more in urban settings where more claims are filed because of accidents, crime, and weather-related damages.
The table below displays average liability insurance and full coverage rates in all 50 states, as well as the District of Columbia as of 2019. The costs below come from the III and were initially sourced by the National Association of Insurance Commissioners (NAIC). In 2019, the national average for liability was $650.35, while full coverage policies averaged $1,070.47.
| State | Liability | Full Coverage |
|---|---|---|
| Alabama | $527.20 | $932.14 |
| Alaska | $584.90 | $991.09 |
| Arizona | $662.55 | $1,063.93 |
| Arkansas | $484.37 | $897.92 |
| California | $627.77 | $1,051.79 |
| Colorado | $704.82 | $1,174.87 |
| Connecticut | $799.45 | $1,237.55 |
| District of Columbia | $819.36 | $1,440.58 |
| Delaware | $897.87 | $1,289.93 |
| Florida | $997.20 | $1,414.17 |
| Georgia | $829.86 | $1,259.49 |
| Hawaii | $478.83 | $839.87 |
| Idaho | $436.66 | $738.10 |
| Illinois | $522.11 | $939.64 |
| Indiana | $444.98 | $777.05 |
| Iowa | $350.31 | $714.86 |
| Kansas | $426.14 | $818.99 |
| Kentucky | $609.98 | $935.61 |
| Louisiana | $1,023.91 | $1,557.22 |
| Maine | $375.40 | $696.37 |
| Maryland | $749.18 | $1,236.61 |
| Massachusetts | $664.92 | $1,182.69 |
| Michigan | $979.47 | $1,495.94 |
| Minnesota | $502.32 | $892.17 |
| Mississippi | $544.43 | $975.58 |
| Missouri | $527.59 | $929.91 |
| Montana | $437.69 | $834.86 |
| Nebraska | $431.71 | $807.30 |
| Nevada | $925.71 | $1,292.52 |
| New Hampshire | $442.52 | $864.35 |
| New Jersey | $958.31 | $1,395.53 |
| New Mexico | $584.25 | $932.67 |
| New York | $932.46 | $1,445.30 |
| North Carolina | $392.06 | $741.70 |
| North Dakota | $312.30 | $703.73 |
| Ohio | $447.86 | $802.72 |
| Oklahoma | $504.79 | $908.95 |
| Oregon | $684.81 | $990.00 |
| Pennsylvania | $548.58 | $992.33 |
| Rhode Island | $918.30 | $1,382.64 |
| South Carolina | $715.26 | $1,114.90 |
| South Dakota | $337.11 | $745.33 |
| Tennessee | $479.43 | $863.39 |
| Texas | $650.17 | $1,143.85 |
| Utah | $615.15 | $954.14 |
| Vermont | $374.06 | $785.37 |
| Virginia | $491.51 | $861.18 |
| Washington | $705.11 | $1,066.84 |
| West Virginia | $515.20 | $946.03 |
| Wisconsin | $421.21 | $767.42 |
| Wyoming | $365.08 | $776.22 |
If you’d like to explore pricing, it’s a good idea to compare quotes from a few companies. It’s never a good idea to buy the first policy you’re offered. Rates vary quite a bit, so, it’s important to do your due diligence and find the best deal.
Frequently Asked Questions
Which coverage do I need to legally drive?
Liability is required in nearly every state to drive legally. However, liability limits vary by state. Be sure to look at your state’s laws to know which types of insurance and how much of each you need.
Do I need all three types of insurance
Legally, unlike liability, you don’t need full coverage to drive. But it can be a smart move. This is because it gives you a broader range of coverage than basic liability. You may also need full coverage if you’re financing or leasing your car. It helps you avoid paying lots of money out of pocket if a random accident damages your car.
What does full coverage include?
This is when you have at least the three major types of insurance on your policy. These types are:
- Collision
- Comprehensive
- Liability
These aren’t the only coverage types you can add, though. Check with your agent to go over the entire list of options that your carrier can provide you.
Is full coverage better than liability insurance?
While liability insurance is what most states require, it might be worth it to get full coverage. Liability only protects you from having to pay property damage/bodily injury costs for the other party in an accident. Having the full package protects you from:
- Damage to your own car in an accident
- Vandalism, theft, natural disasters, and other random events that comprehensive covers.
Having liability insurance only protects you from a couple of different costs. On the other hand, full coverage gives you the whole spectrum of protection, making it the more complete choice.
