Liability-only insurance pays for damage your car causes to someone else's vehicle or property, but not for damage to your own car
Liability coverage is the legal minimum in every state. It has two parts: bodily injury liability (which pays medical bills and lost wages if you injure someone) and property damage liability (which pays to fix or replace their vehicle or other property). Liability-only means you buy these two parts and nothing else — no collision, no comprehensive, no uninsured motorist protection.
If you cause an accident, your liability insurance pays the other person's bills up to your policy limits. If you're hit by an uninsured driver, or if your own car is stolen or damaged by weather, you pay out of pocket. This is the cheapest insurance option, but it leaves you exposed to large personal losses if you cannot afford to replace your vehicle or if you cause serious injury to someone else.
Key Takeaways
- Liability-only covers damage you cause to other people and their property, but not damage to your own vehicle.
- Every state requires a minimum amount of liability coverage, and the limits vary by state — typically $25,000 to $100,000 per person for bodily injury.
- If you cause an accident and your liability limits are too low, you can be sued for the difference, and the court can garnish your wages or seize assets.
- Liability-only makes sense for older paid-off cars with low market value, but leaves you unprotected if you're hit by an uninsured driver or your car is stolen.
State minimum liability limits and how they work
Each state sets its own minimum liability requirements. Most states use a format like 25/50/25, which means $25,000 bodily injury per person, $50,000 bodily injury per accident, and $25,000 property damage. Some states go higher — Florida requires 10/20/10, while New York requires 25/50/25. A few states allow drivers to post a bond or prove financial responsibility instead of buying insurance, but buying a policy is almost always simpler.
Your policy limit is a ceiling, not a may provide. If you cause an accident and the other person's medical bills are $60,000 but your bodily injury limit is $25,000, your insurance pays $25,000 and you are responsible for the remaining $35,000. The injured person can sue you personally for that amount, and if they win, the court can garnish your wages, place a lien on your home, or seize your bank accounts — depending on your state's laws.
Property damage limits work the same way. If you hit a parked car worth $40,000 and your property damage limit is $25,000, you owe the difference. This is why many people buy higher limits than the state minimum, even with liability-only coverage.
When liability-only makes financial sense
Liability-only is cheapest because the insurance company has no obligation to pay for your car. If your car is worth less than the cost of adding collision and comprehensive coverage over several years, liability-only can be the right choice. For example, if you own a 15-year-old sedan worth $3,000 and collision coverage costs $400 per year, you would need to go nine years without a major accident for the coverage to pay for itself.
Liability-only also makes sense if you have savings set aside to cover car repairs or replacement. If your car is damaged and you can afford to fix or replace it yourself, you don't need the insurance company to pay. The risk you're protecting against is the financial ruin of causing serious injury to someone else, not damage to your own vehicle.
Some people choose liability-only because they drive rarely, in low-traffic areas, or have an excellent safety record. The lower your risk of causing an accident, the less valuable collision and comprehensive coverage becomes. However, you cannot control whether someone else hits you or whether your car is stolen, so this reasoning only works if you can truly afford to replace your car out of pocket.
What liability-only does not cover
Collision coverage pays to repair or replace your car if you hit another vehicle, a tree, a guardrail, or any other object. Without it, you pay the full repair bill yourself. Comprehensive coverage pays for theft, weather damage (hail, flooding, wind), vandalism, and hitting an animal. Without it, a stolen car or a tree branch through your windshield is your loss.
Uninsured motorist coverage protects you if you're hit by a driver with no insurance or by a hit-and-run driver. Without it, you have to sue the other driver personally to recover damages, and if they have no assets, you may recover nothing. Underinsured motorist coverage fills the gap if the other driver's liability limits are too low to cover your injuries or damage.
Liability-only also does not include medical payments coverage (which pays your medical bills regardless of fault) or personal injury protection (which covers lost wages and other costs in no-fault states). You also get no rental car reimbursement if your car is in the shop, and no roadside information for towing or lockouts.
The risk of being sued for damages beyond your policy limits
If you cause a serious accident and the damages exceed your liability limits, the injured person can file a lawsuit against you personally. This is called an underinsured claim, and it can result in a judgment that follows you for years. A court judgment can lead to wage garnishment, bank account levies, or a lien on your home — the exact remedies depend on your state.
For example, if you cause an accident that injures two people, and their combined medical bills and lost wages total $150,000, but your bodily injury limit is only $50,000, you could be personally liable for $100,000. If you don't have that money, the injured parties can pursue collection through the courts. Some states allow them to garnish up to 25% of your wages indefinitely until the judgment is paid.
This is why many insurance advisors recommend buying higher liability limits than your state's minimum, even if you choose liability-only for collision and comprehensive. Raising your bodily injury limit from $25,000 to $100,000 usually costs only $10 to $30 more per month, but it protects you from a lawsuit that could cost hundreds of thousands of dollars.
How liability-only compares to other coverage options
Liability-only is the bare legal minimum. Adding collision coverage protects you if you cause an accident or hit an object. Adding comprehensive protects you from theft and weather. Most people with financed or leased cars are required by their lender to carry collision and comprehensive, so liability-only is only an option if you own your car outright.
The table below shows what each coverage type pays for and what you pay for yourself:
| Coverage Type | Your Car Damage | Other Person's Damage | Your Medical Bills | Typical Cost |
|---|---|---|---|---|
| Liability Only | You pay | Insurance pays (up to limit) | You pay | Lowest |
| Liability + Collision | Insurance pays (minus deductible) | Insurance pays (up to limit) | You pay | Medium |
| Liability + Comprehensive | Insurance pays for theft, weather, vandalism (minus deductible) | Insurance pays (up to limit) | You pay | Medium |
| Full Coverage (Liability + Collision + Comprehensive) | Insurance pays for all damage (minus deductible) | Insurance pays (up to limit) | You pay | Highest |
How to decide if liability-only is right for you
Ask yourself three questions: First, can you afford to replace your car if it's totaled? If your car is worth $5,000 and you have $5,000 in savings, you can afford liability-only. If your car is worth $20,000 and you have $2,000 in savings, you cannot. Second, can you afford to pay for injuries you cause to someone else? If you cause an accident and the damages exceed your liability limits, can you pay the difference? If not, buy higher liability limits. Third, how often do you drive, and in what conditions? If you drive daily in heavy traffic, the odds of an accident are higher, and liability-only is riskier.
If you're financing or leasing your car, your lender will require collision and comprehensive coverage, so liability-only is not an option. If you own your car outright and it's old or low-value, liability-only may be reasonable — but only if you have an emergency fund to cover repairs or replacement, and only if you buy liability limits higher than your state's minimum.
Frequently Asked Questions
Is liability-only insurance legal?
Yes, liability-only meets the legal minimum in every state. However, if you finance or lease your car, your lender will require you to carry collision and comprehensive coverage as well. Liability-only is only legal if you own your car outright.
What happens if I cause an accident and my liability limit is too low?
The injured person can sue you personally for the amount your insurance doesn't cover. If they win, the court can garnish your wages, place a lien on your home, or seize your bank accounts. This judgment can follow you for years or even decades, depending on your state's laws.
Can I get liability-only insurance if my car is financed?
No. Your lender requires collision and comprehensive coverage to protect their interest in the vehicle. You must carry these coverages as long as you owe money on the loan. Once you pay off the car, you can switch to liability-only if you choose.
Does liability-only cover me if I'm hit by an uninsured driver?
No. Liability-only only covers damage you cause to others. If an uninsured driver hits you, you would need uninsured motorist coverage to recover damages. Without it, you would have to sue the other driver personally, and if they have no assets, you may recover nothing.
How much does liability-only insurance cost compared to full coverage?
Liability-only is the cheapest option, typically costing significantly less than full coverage depending on your age, driving record, location, and vehicle type. The exact difference varies by insurance company and state, so it's worth getting quotes from multiple insurers to compare.