Is liability the minimum amount of car insurance?

48 out of 50 states require liability car insurance to drive. At average rates of $43.03/mo, it pays for damage you cause to other people or their property.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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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: May 12, 2020

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Here's what you need to know...

  • Prior to driving in America, you must be able to purchase car insurance or provide proof of financial responsibility
  • Liability car insurance is cheaper than full coverage but obviously does not offer you the same amount of protection
  • As with any insurance, you should shop around to get as many car insurance quotes as possible in order to find the cheapest policy

Liability car insurance protects you from paying other people’s bills if you cause an accident.

Having just liability car insurance means that you purchased only the state-mandated minimums for car insurance coverage in the form of bodily and property liability.

Just liability is the opposite of full coverage which includes collision, comprehensive and uninsured driver insurance.

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Liability Car Insurance Compared to Full Coverage

There are two types of liability car insurance:

  • Bodily damage
  • Property damage

Liability car insurance is meant to protect you from paying for medical or repair/replacement bills of the other party if you cause an accident.

Liability car insurance is much cheaper than full coverage car insurance.

Full coverage protects you and your car as well as the other people in an accident. Liability car insurance does not offer this additional protection.

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Deciding Whether to Choose Liability-Only Car Insurance

Most people start out with full coverage car insurance because they received financial help to buy a car, and full coverage is a stipulation of their loan.

Once this loan is paid off, people start to consider dropping down to liability car insurance only.

There are a few things you should consider before making this decision:

  • Full coverage car insurance may cost more than liability car insurance, but it also offers more protection. Not only does it cover both you and the other party if you cause an accident, it also can protect your car from theft, vandalism and weather damage
  • If you pay more than 10 percent of your car’s value for full coverage, it’s probably a good idea to look into liability only car insurance because the cost of replacing your vehicle after an accident will probably be less than your yearly insurance costs
  • If you do opt for just liability car insurance, you should have an emergency fund in case you need to fix or replace your car. Don’t switch to liability car insurance if you can’t afford to save money for emergencies

Possible Ways to Lower the Cost of Car Insurance

Liability car insurance can cost as little as $50 per month and can run up to hundreds per month, depending on a variety of factors.

In addition, prices vary from state to state, so it’s better to get prices from local insurers.

You can also save on your liability car insurance by asking for discounts.

Insurance companies offer so many discounts that it is almost impossible to not qualify for some such as your age, safety devices on your car, your gender, and your driving record.

How you pay your premiums may affect your overall savings. If you pay by setting up an automatic payment from your bank account or credit card, your insurer might give you a discount for that.

Sometimes insurance companies add surcharges for processing checks, which is another reason to have your insurer paid automatically.

If you’re a safe driver and don’t cause accidents, you could save a lot of money.

Penalties for Not Having Car Insurance

Most states have liability car insurance as a minimum requirement to drive as well as strict penalties to enforce these laws.

If you get pulled over and found without insurance, your license and registration could be revoked and your car impounded. In addition, you might have to pay a fine and surcharges.

Overall, it’s more cost effective to buy liability car insurance rather than to risk driving your car without it.

Once you purchase the insurance, make sure to always have proof, such as your insurance card, in your car at all times.

If you’re looking for the cheapest car insurance to meet state requirements and you feel confident that you could afford to repair or replace your car, purchasing just liability car insurance is the way to go.

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