Liability vs. “full coverage” car insurance: What’s the difference?

Liability insurance is a type of car insurance that can help cover the injuries and damage you cause in a car accident. It's different from a “full coverage” car insurance policy, which includes additional, sometimes optional coverages that protect your own vehicle and related costs, such as collision and comprehensive insurance.

Liability insurance typically includes two main types of coverage:

• Bodily injury liability: Helps cover another party’s medical expenses in a covered accident you cause, whether they’re another motorist, a passenger, or a pedestrian.

• Property damage liability: Helpscover damage you cause to another person’s property, including their vehicle.

The cost of liability insurance can depend on various factors, such as your age, location, driving history, and credit score. Many insurers provide free online quotes, so you can estimate your total car insurance cost as you’re shopping around.

That said, liability insurance is almost always more budget friendly than what drivers commonly refer to as “full coverage,” which typically includes additional protections like comprehensive and collision.

However, “full coverage” can potentially save you more money in the long run if you ever cause an accident that damages your own vehicle and results in repair or replacement costs.

Liability insurance covers many of the costs the other driver may have from an accident you cause.

Some injury-related expenses that liability insurance may cover include:

• Hospital bills and medicine

• Loss of income due to the injury

• Pain and suffering payments

Property damage liability insurance, on the other hand, can help repair or replace another person's property if you're at fault for an accident.

Types of covered property may include:

• Vehicles

• Storefronts

• Trees

• Public property, like bridges and road signs

The biggest distinction between liability and “full coverage” insurance is that liability doesn’t cover damage to your own property. For example, if you hit a patch of ice while driving and rear-end another vehicle, your liability insurance would only help pay for damage to the other vehicle—not your own.

Another important exclusion to liability insurance is that it doesn’t help protect you after incidents of car theft or vandalism.

If your car is totaled in an accident and somebody else is at fault, you’ll typically file a claim with their insurance provider. The at-fault person’s insurer, not yours, is usually responsible for paying for the vehicle damage.

If you total your car in an accident you caused, you may need to pay out of pocket to replace it. That’s one benefit of carrying what’s often called “full coverage” insurance, which typically includes collision coverage—it can help pay for damage to your own vehicle, regardless of who’s at fault.

Since each vehicle can hold at least one passenger, insurance companies provide two coverage limits: per-person and per-accident coverage.

Insurance providers list their coverage limits in this format: 25/50/25. These numbers represent thousands of dollars (so, "25" means $25,000). Here's what each number indicates:

• 25: The amount of bodily injury liability coverage per person

• 50: The amount of bodily injury liability coverage per accident

• 25: The amount of property damage liability coverage per accident

Let's say you have 25/50/25 liability insurance:

• If you're at fault in a car accident and one person is injured, your insurance would cover up to $25,000 for their bodily injury.

• If multiple people are injured, your coverage would be capped at a total of $50,000 for bodily injury in the entire accident.

• Additionally, your insurance would cover up to $25,000 for property damage resulting from the accident.

If the total costs for bodily injury and property damage exceed these coverage limits, you may be personally responsible for the remaining expenses.

Remember, there isn't a policy available that protects you from every possible loss. When people use the term ‘full coverage,’ they typically mean a policy that includes the following types of coverage in addition to bodily injury liability and property damage liability:

True to its name, collision coverage helps you pay for damages due to collisions—including accidents you're at fault for. It can also help if an at-fault driver doesn't have the coverage to pay to fix your vehicle.

Comprehensive insurance covers damage caused by non-collisions—that’s why some car insurance companies call comprehensive coverage “other than collision” coverage. This includes:

• Theft

• Vandalism

• Fire

• Falling objects, like hail

• Hitting a deer

Collision and comprehensive coverages are typically optional by law. However, your lender might require them if you finance or lease your car.

“Full coverage” doesn't mean you have protection for everything. For example, insurers might not cover damages from:

• Illegal activities, like street racing

• Intentional damage

A “full coverage” policy also might not cover injuries caused by a driver who doesn’t have enough insurance—or any insurance at all. That’s why insurers offer uninsured motorist coverage (UM) and underinsured motorist coverage (UIM). Some states require these coverages, and others will automatically add them to your policy and only remove them if you make a formal request in writing.

Finally, it's important to note that “full coverage” insurance doesn't cover expenses below your deductible or above your coverage limit.

Almost every state requires liability insurance. In other words, it's the minimum amount of coverage you need to legally drive just about anywhere in the United States.

“Full coverage,” on the other hand, is typically optional by law, so you don’t necessarily need it. Still, there are scenarios in which carrying “full coverage” may be a good idea for you.

For example, if you’re looking to buy a new or preowned vehicle and need to borrow from a lender like a bank or even an auto dealer, they may require you to carry collision and comprehensive coverages as well—which, combined with liability, typically makes up “full coverage.”