Liability insurance covers damage and injuries you cause to others but doesn’t pay for repairs to your own vehicle, which makes it the cheaper option upfront. Full coverage adds collision and comprehensive protection, covering your own car in accidents, theft, and weather-related damage, but at a noticeably higher premium. For older vehicles worth less than a few thousand dollars, liability-only sometimes makes more financial sense, since the cost of full coverage over time can exceed the car’s value. You can compare the estimated premium difference for your own vehicle using our car insurance calculator.
If you’re financing or leasing your vehicle, full coverage is typically required by the lender until the loan is paid off, so this decision often isn’t fully optional in the early years of ownership. Once the loan is paid off, it’s worth reassessing whether full coverage still makes sense based on your car’s current value and your driving record — see how your driving record affects insurance costs for how that factors into your premium either way, and how vehicle type affects your insurance rate for how your specific car influences the price gap between the two options.