Liability-Only Car Insurance

Liability-only car insurance covers the cost of damage you cause to other people or their property. The average rates for liability coverage are $43.03/mo.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jun 12, 2020

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Here's what you need to know...

  • Liability-only policies cover the cost of damages to another vehicle and other individuals if you are found to be at-fault in an accident
  • Liability will not cover any of your medical bills or necessary repairs to your car
  • It is smart to include collision and comprehensive insurance if you can afford it

In terms of the premiums that you pay for your car insurance, a liability-only car insurance policy can save you money.

However, it is important to note that if you have an accident, you could end up paying far more than you would if you had maintained a more complex car insurance policy.

You see, liability insurance only covers the cost of the damages to the other vehicle involved in an accident that you cause.

This type of policy will also cover medical care for people in your car (excluding yourself) and the driver and passengers of other vehicles involved.

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You are excluded from any coverage when it comes to a liability-only policy. If you cause an accident, that means you will be responsible for the damages to your vehicle all by yourself.

Will my car be repaired if someone else with a liability-only policy causes an accident?

If someone else causes an accident that damages your vehicle or causes you physical harm, their liability policy will cover your damages.

If, however, their insurance coverage isn’t enough to cover all of the costs, then you could be in a bind.

In most states, you do have the right to sue an individual who causes an accident and doesn’t have adequate insurance to cover those damages.

The problem is that collecting after you have won a case can be a significant issue.

Even if the judge rules in your favor, if the defendant doesn’t have any assets, then you have no way of getting the money.

The government does not garnish wages for this type of lawsuit. In fact, it is extremely rare for anyone to have their wages garnished for any situations other than owing the IRS or child support.

If you have liability-only insurance, then your insurance will not be of any help to you either.

In order to get protection for your car in this type of circumstance, you will need to have uninsured/underinsured coverage in addition to your liability coverage.

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Other than liability, what coverage do I need?

Whether you need additional insurance really depends on the type of car that you have.

Comprehensive and collision coverage is recommended for any late model cars. If, however, you drive a beater, these coverage options may not be right for you.

If you are financing your vehicle, your lender will probably require you to purchase both collision and comprehensive coverage to ensure that, if you have an accident, the insurance is in place to repair the vehicle.

If you cancel this coverage after you buy the vehicle, the insurance company will inform your lender!

Comprehensive coverage is insurance that provides you with protection in case of:

  • car theft
  • theft of parts of your car, such as tires and rims
  • repairs if your car is damaged by fire, hail, wind, or other natural disasters

Essentially, this coverage covers everything but theft of personal possessions in your vehicle and a collision.

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Collision coverage comes into force if you have an accident, which doesn’t mean that another car has to be involved. If you strike a tree, sign, or pedestrian, that is when collision coverage pays up.

How much more can I expect to pay for car insurance if I add comprehensive and collision coverage?

The truth is that how much you pay depends on a number of factors.

These factors include:

  • The value of your car
  • The type of driver you are
  • What safety features you have on the car
  • Where you live
  • How large of a deductible you choose
  • The insurance carrier
  • Your credit score
  • Your age
  • Who else is driving your vehicle
  • Your driving record

Typically, comprehensive and collision insurance are going to cost quite a bit more than liability insurance alone.

The Insurance Information Institute does warn against buying your car insurance based solely on price.

It recommends that you use rating companies such as J.D. Power & Associates  and A.M. Best to check out any potential companies for other concerns, such as customer service, increasing rates, and financial stability.

Should I buy comprehensive and/or collision insurance?

With some exceptions, the answer is yes as this is the best way to protect your assets, which in this case is your car.

If you are driving a car with no cash value that would cost more to fix than it’s worth, then there is no benefit to maintaining more insurance. You should simply ensure you have enough liability to cover a serious accident.

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