What is Liability Only Car Insurance?

Liability only car insurance provides the legally required minimum amount of auto insurance coverage. It only pays for damages and injuries you cause to others in an at-fault accident.

Liability only policies do not cover damage to your own vehicle in a crash. This article will explain everything you need to know about liability only car insurance and how to determine if it’s the right choice for your needs.

What is Liability Insurance?

Liability insurance is the part of an auto insurance policy that pays for injuries and property damage you cause to others when you are at fault in an accident.

It is often referred to as third-party coverage since it protects the other driver and passengers involved, who are considered third parties.

Liability coverage includes:

  • Bodily injury liability – Covers medical expenses of injured parties in an at-fault accident up to the limits of your policy.

  • Property damage liability – Covers repairs to the other vehicle and property damaged in an at-fault accident up to your policy limits.

Liability insurance is required in most states. You must carry at least the minimum liability coverage limits mandated by your state.

What Are the Minimum Limits?

Minimum liability limits vary by state but commonly fall in the range of:

  • $20,000 to $30,000 bodily injury per person
  • $40,000 to $60,000 bodily injury per accident
  • $10,000 property damage per accident

For example, Colorado requires minimum bi limits of $25,000 per person/$50,000 per accident and property damage limits of $15,000 per accident.

Some states use a combined single limit structure instead of split limits. For instance, Alaska’s minimum liability limit is simply $50,000 combined per accident.

What Does Liability Only Insurance Cover?

Liability only insurance policies strictly cover:

  • Bodily injury and medical costs of other parties caused by your at-fault accident, up to the per person and per accident limits.

  • Repairs to the other vehicle and property damaged by your at-fault accident, up to the property damage limit.

Liability only policies do not provide coverage for:

  • Injuries to you or your passengers.

  • Damage to your own vehicle from a collision.

  • Damage to your car from incidents like vandalism, theft, fire, or severe weather.

If you want coverage for yourself, passengers, and your vehicle, you need to upgrade to a full coverage policy.

Who May Opt for Liability Only Insurance?

There are certain drivers who may find liability only insurance meets their needs:

  • Owners of older vehicles – Once a car drops in value, collision and comprehensive coverage may cost more than the vehicle is worth. Liability only may be the better option.

  • Careful drivers on a budget – Drivers with excellent records may feel comfortable with liability only insurance if premiums fit their budget better than full coverage.

  • Part-time drivers – Those who only drive occasionally may find cheaper liability only insurance suits their limited usage.

  • Drivers with substantial savings – Wealthy drivers who can easily afford repairs or replacement may not need extra coverage.

Is Liability Insurance Required?

Yes, liability insurance is required in most states. Only New Hampshire and Virginia don’t mandate liability coverage.

You must carry at least the minimum liability insurance required by your state to legally drive. These state-mandated minimums are designed to ensure you can cover costs if you cause an accident.

Driving without meeting your state’s liability requirements can lead to fines, license suspension, and having your vehicle impounded or registration revoked. Maintaining continuous liability coverage is essential.

What Happens If You Only Have Liability Insurance?

With liability only insurance, you are not covered for damage to your own vehicle. Here are the implications in different accident scenarios:

  • You cause an accident – Your liability coverage pays for injuries to the other driver and repairs to their vehicle. But you must pay out-of-pocket for repairs or replacement of your own car.

  • Someone else hits you – Their liability insurance pays for your injuries and repairs or replacement of your car if they are at fault. But you have no backup coverage through your own policy if their limits are insufficient.

  • Natural disaster, theft or vandalism – You pay entirely out-of-pocket to repair or replace your damaged or stolen vehicle. Liability insurance does not cover these non-accident incidents.

  • Uninsured drivers – With liability only insurance, you have no coverage for your vehicle or injuries through your own policy if you are hit by an uninsured or underinsured driver. You can attempt to pursue compensation through that at-fault driver.

As you can see, liability only insurance leaves you unprotected in many scenarios. Weigh the risks and financial factors carefully as you decide if liability only insurance is right for your situation.

How Much Does Liability Only Insurance Cost?

Liability only car insurance generally costs significantly less per month than full coverage insurance. According to 2021 national averages from the National Association of Insurance Commissioners:

  • Minimum liability car insurance: $566 per year

  • Full coverage car insurance: $1,764 per year

However, liability only insurance rates can vary substantially based on:

Driver factors

  • Age
  • Driving record
  • Location
  • Credit score
  • Type of vehicle
  • Mileage

Policy choices

  • Liability limits
  • Deductibles
  • Extra policy options like roadside assistance

Shop around and compare customized liability only quotes to find your best rate.

Pros of Liability Only Car Insurance

Cost savings

Liability only insurance provides the minimum coverage required by law at the lowest possible cost. Premiums are generally 50% or more cheaper than full coverage.

Ideal for older cars

If your vehicle is near the end of its lifespan and losing value, collision and comprehensive coverage may not be worth the extra premium cost. Liability only makes sense in such cases.

Good option for some drivers

Younger drivers with new cars will need full coverage. But liability could work for safe, experienced drivers who can afford repairs out-of-pocket if necessary.

Cons of Liability Only Policies

No coverage for your vehicle

You pay 100% out-of-pocket for any repairs or replacement costs if your own car is damaged, regardless of fault.

Insufficient coverage limits

Bare minimum liability limits may not provide enough coverage if you cause a serious accident. Medical

Liability Auto Insurance 101


Should I keep full coverage on my paid off car?

Once you’ve paid your vehicle off, you’re no longer subject to any insurance requirements other than your state’s minimums. If you want to drop some types of coverage to save money, that’s up to you. Either way, have your insurer remove the lender as a lienholder on your policy.

Which insurance protects you if you are injured by a driver who has no way to pay costs?

Uninsured motorist coverage protects you if you’re hit by a driver who has no auto insurance. Underinsured motorist coverage, which is usually offered alongside uninsured motorist coverage, protects you if you’re hit by a driver who doesn’t have enough coverage to pay for the damages or injuries they caused.

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