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Car insurance pricing typically comes in two price points: minimum and full coverage. The average annual cost of car insurance is $565 for minimum liability coverage and $1,674 for full car insurance.

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Car insurance pricing typically comes in two price points: minimum and full coverage. The average annual cost of car insurance is $565 for minimum liability coverage and $1,674 for full car insurance.a group of people standing in a parking lot: Car accident on road© Yellow Dog Productions/Getty Images Car accident on road

Full coverage is typically more expensive and for good reason – it builds on basic liability insurance by adding additional coverages. But why would someone choose full coverage vs. liability, especially if the cost can be higher? The difference between liability and full coverage auto insurance is important to understand so you make the right choice – and not one solely based on cheap coverage – when buying car insurance.https://products.gobankingrates.com/r/d9360ea31bf06ea8b9d0ef49288e28fb?subid=

Liability vs full coverage insurance

Take a closer look at the difference between liability insurance vs. full coverage. You already know that full coverage is more expensive. But there is more to the decision-making process when shopping for vehicle insurance than price.

Liability coverage

Liability car insurance is the minimum amount of coverage nearly all states will require you to have. If you are at fault in an accident, liability insurance will pay for damages to third parties. Liability coverage comes in two types: bodily injury and property damage. Bodily injury liability insurance pays for others’ medical expenses and lost wages. Property damage liability insurance pays for repairs or replacement of items you damaged in a crash, such as someone else’s car, a mailbox or a light pole.

The issue with liability insurance is its scope. If you rear-end another vehicle, liability insurance will pay for the other vehicle passenger’s medical bills and the repairs to the car. But the damages to your vehicle are not covered by liability insurance. The money it will cost to replace or repair your front end will have to come out of your pocket.

Full coverage

Full coverage car insurance includes the essential liability insurance you are required to have, plus adds coverage that pays for damages and losses to your vehicle. As mentioned, if you rear-end someone, liability insurance does not help your situation. Full coverage can include comprehensive and collision insurance, both designed to pay for your vehicle’s damages.

Collision insurance steps in to cover your car and property’s damages and losses if you cause a collision or accident. Comprehensive insurance covers your vehicle from other events, such as flooding, striking an animal, a break-in, fire, vandalism and more.

Full coverage is more expensive but provides you with complete coverage against damages and losses you cause to others – and to yourself.

Additional coverage options

To further customize your car insurance, there are other types of coverage you can add. Some of the most common are:

  • Personal injury protection: PIP pays for medical bills for yourself and any passengers, regardless of who caused the accident. It is also known as no-fault insurance.
  • Uninsured/underinsured motorist protection: If the party responsible for the accident does not have enough (or any) car insurance, your insurance company will pay for your damages.
  • Gap insurance: When you buy a new car, it tends to drop in value quickly. You will likely owe more than it is worth initially. Gap insurance will pay the difference between what your insurance company will pay you for the vehicle and what you owe in payments.
  • Rental reimbursement: The optional coverage will pay for a rental car while your vehicle is unavailable because it is in the shop because of a covered car insurance claim.

Cost of car insurance

One of the biggest factors affecting the cost of car insurance is the amount of coverage you buy. Liability insurance is cheaper than full coverage. But there are other factors that affect car insurance rates.

Cost by gender

Women generally pay less for car insurance, regardless of how much coverage they buy. Refer to Bankrate’s findings on the average cost of car insurance for liability insurance vs. full coverage, based on gender.

GENDERAVERAGE ANNUAL COST FOR LIABILITY INSURANCEAVERAGE ANNUAL COST FOR FULL COVERAGE INSURANCE
Female$522$1,532
Male$586$1,748

Cost by carrier

Choosing the right car insurance company can save you hundreds of dollars every year in car insurance. To find the cheapest insurance, collect car insurance quotes from several carriers to compare. You will likely find that the same type of car insurance could vary greatly in cost from one carrier to another.

CAR INSURANCE COMPANYAVERAGE ANNUAL COST FOR LIABILITY INSURANCEAVERAGE ANNUAL COST FOR FULL COVERAGE INSURANCE
Allstate$696$1,921
Amica$405$1,378
Erie$409$1,233
Geico$433$1,405
The Hartford$754$2,270
MetLife$821$2,123
Nationwide$501$1,485
Progressive$582$1,509
State Farm$539$1,457
USAA$384$1,225

How much coverage do I need?

Deciding on how much car insurance you need is not easy. First of all, if you plan on financing your car, the lender will probably require you to have full car insurance. Even if you pay cash for your vehicle, you may want to buy more than the state’s minimum liability insurance requirement.

Say you live in California and have minimum coverage. The state requires all drivers to have at least $15,000 per person and $30,000 per accident in bodily injury liability, as well as $5,000 or more in property damage coverage. If you cause an accident and the other car has $8,000 in damages, your insurance company will pay no more than $5,000 towards the repair, leaving you to find an additional $3,000 to pay the difference.

Based on that scenario, it might be smart to buy as much car insurance coverage as you can afford. Many car insurance experts recommend liability coverage of 100/300/100 if you have assets such as a home or business that someone could go after if you cause a costly accident and do not have the coverage to back it up. The 100/300/100 limit is $100,000 per person and $300,000 per accident in bodily injury and $100,000 for property damage.

Frequently asked questions

What does full car insurance include?

Full car insurance consists of liability insurance to pay for others’ damages and injuries, as well as comprehensive and collision insurance to pay for damages to your vehicle.

What does minimum liability insurance mean?

Nearly every state has a minimum amount of car insurance as a requirement. The minimum coverage typically starts with liability insurance, which pays for damages and injuries you cause to others.

Methodology

Bankrate utilizes Quadrant Information Services to analyze 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverages that meet each state’s requirements. Our base profile drivers own a 2019 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.