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How To Determine If Your Car Needs Comprehensive Or Liability Insurance

By Aaron Crowe

Knowing if your car needs more than basic liability insurance can be as simple as knowing how old your car is.

One rule of thumb is that if you drive an old car and it’s paid for, you don’t need much more than liability insurance, which costs less than comprehensive coverage. But it can be a bit more complicated than that, depending on state laws where you live, and your needs for insurance protection.

Insurance is meant to protect against a devastating financial loss, so determining if carrying comprehensive and collision coverage, in addition to liability coverage, should be weighed against the cost of replacing or repairing the car and how big of a financial burden that would be, says Eric Stauffer of ExpertInsuranceReviews.com.

If you can’t easily repair or replace your car out-of-pocket, then you’ll need comp and collision.

Before getting into more detail about when to have certain types of insurance, an explanation of insurance terms should make things clearer.

Liability coverage

This insurance is cheaper for two simple reasons: it covers less and usually doesn’t require a deductible. It doesn’t cover your own vehicle in an accident, but covers damage to other vehicles that you’re responsible for hitting.

It will also pay for the replacement of belongings in the other person’s car, their medical bills and your legal bills. Passengers in your car who are injured in an accident that you’re at fault for are also covered under liability insurance, though not always — check with your insurance agent to see if bodily injury coverage to your passengers is included.

Property damage liability insurance is also available, covering you if you hit a neighbor’s tree, for example. Uninsured driver liability insurance is another add-on to consider in case you hit an uninsured or under-insured driver.

Comprehensive coverage

This covers physical damage to other vehicles and yours in a traffic accident. Also called collision insurance, it also covers damage to your car from natural disasters, such as storms.

You’ll usually have to pay a deductible when making a claim, which might not be worthwhile if your car isn’t worth much.

Liability is usually a part of comprehensive coverage, though you can opt for liability only under certain circumstances, such as owning your car outright and not having a loan on it.

When liability coverage is best

If you have an old car that’s paid for, liability only coverage makes sense. The car may only last a few more years anyway, so paying extra for comprehensive coverage to repair it may not be worth it. If the repair costs more than the car’s value, comprehensive insurance won’t pay for more than the car’s value anyway.

But you should also consider if you can afford to buy a comparable car to replace yours in an accident that you don’t have collision coverage for.

For example, if your car is valued at $12,000 and you have little or no savings, then it would be difficult to repair or replace the car if you only have liability coverage, Stauffer says. But if your car is worth $2,000 and you have that much in savings, then a comparable car is affordable and liability insurance is worthwhile, he says.

“Liability is pretty much a component of all auto policies, so it is rarely an optional program,” says Kristofer Kirchen, president of Advanced Insurance Managers in Tampa, Fla. “However, there are rare times where one can forego liability.”

These include having a seasonal vehicle, where an owner spends part of the year in another state, Kirchen says. Some companies are willing to suspend coverage, he says.

Another push toward getting liability coverage only is how close you live to public transportation. If you don’t use your car much and can live without it for awhile by using public transportation after a car accident, then getting cheaper liability coverage makes sense.

When comprehensive coverage is best

If you lease a car or have a car loan, your lender will often require comprehensive coverage.

Even if you own the car outright, comprehensive coverage can be a smart choice if you don’t have enough money in savings to buy a new car if your car is totaled.

Another reason to have comprehensive and collision coverage is when you want coverage for damage by someone else who either has no insurance, inadequate limits of insurance, or who can’t pay, Kirchen says.

Insurance is meant to protect you from financial disaster. A simple question to ask yourself when considering liability versus comprehensive coverage is: Can I afford to buy a comparable car if my car was totaled today? If not, then you’ll probably want full comprehensive and collision coverage to help replace your car if it’s totaled.

Aaron Crowe is a journalist who covers the auto industry for CheapCarInsurance.net.