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<p><span style="color: #000000;">If you’re looking to save every penny you can on auto insurance, you may be thinking about dropping full coverage and keeping only liability insurance.</span></p>
<p><span style="color: #000000;">In this article, we’ll explain the difference between liability and full coverage. And we’ll take a look at when you might consider dropping full coverage to save on your monthly insurance premium.</span></p>
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<h2><span style="color: #000000;"><strong>Here’s What You Need to Know About Liability vs. Full Coverage</strong></span></h2>
<p><span style="color: #000000;">When to drop full coverage and keep just liability is a question a lot of people ask. But first, let’s take a look at what each kind of insurance coverage is and what’s offered.</span></p>
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<h3><span style="color: #000000;"><strong>Table of Contents</strong></span></h3>
<ul>
<li><strong><a href="https://clark.com/insurance/liability-vs-full-coverage/#liability">What Is Liability Insurance?</a></strong></li>
<li><strong><a href="https://clark.com/insurance/liability-vs-full-coverage/#fullcoverage">What Is Full Coverage?</a></strong></li>
<li><strong><a href="https://clark.com/insurance/liability-vs-full-coverage/#drop">When Should You Drop Full Coverage on Your Car?</a></strong><strong></strong></li>
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<h2 id="liability"><span style="color: #000000;"><strong>What Is Liability Insurance?</strong></span></h2>
<p><span style="color: #000000;">Liability insurance covers those instances in which you’re the responsible party for an accident. It’s comprised of two types of coverage:</span></p>
<ul>
<li><span style="color: #000000;">Bodily injury liability</span></li>
<li><span style="color: #000000;">Property damage liability</span></li>
</ul>
<p><span style="color: #000000;">The first covers medical expenses if you injure someone with your vehicle. The second covers costs if you damage someone else’s vehicle or property while you’re behind the wheel.</span></p>
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<p><span style="color: #000000;">Each state has a required minimum of liability insurance you must carry, often called the state minimum. You can see your state’s minimum </span><a href="https://www.carinsurance.com/Articles/minimum-liability-car-insurance-requirements-by-state.aspx">here</a>.</p>
<p><span style="color: #000000;">But keep this in mind: State minimums are generally enough to protect you only if you have very few financial assets. For example, maybe you don’t own a home and you have no investments or savings. Then for you, just having state minimum liability coverage might make sense.</span></p>
<p><span style="color: #000000;">For everyone else, you’ll want additional coverage!</span></p>
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<h2 id="fullcoverage"><span style="color: #000000;"><strong>What Is Full Coverage?</strong></span></h2>
<p><span style="color: #000000;">Full coverage is comprised of two types of coverage:</span></p>
<ul>
<li><span style="color: #000000;">Collision insurance</span></li>
<li><span style="color: #000000;">Comprehensive insurance</span></li>
</ul>
<p><span style="color: #000000;">Collision insurance is just what its name suggests: It protects you when you’re behind the wheel and cause damage through a collision with another vehicle.</span></p>
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<p><span style="color: #000000;">Comprehensive insurance protects you if your vehicle is damaged when you’re <em>not</em> driving it. For example, a tree could fall on your car while it’s parked, or someone could steal your ride out of your driveway. That’s why it’s called “comprehensive.”</span></p>
<p><a href="https://clark.com/about-clark/clark-howards-bio/">Money expert Clark Howard</a><span> </span><span style="color: #000000;">says the value of your vehicle often drives the decision of whether or not you want full coverage.</span></p>
<p><span style="color: #000000;">“If you own a vehicle that’s still worth a significant amount of money, you absolutely want comprehensive coverage,” Clark says.</span></p>
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<h2 id="drop"><span style="color: #000000;"><strong>When Should You Drop Full Coverage on Your Car?</strong></span></h2>
<p><span style="color: #000000;">When to drop comprehensive and collision coverage on your vehicle and just keep liability insurance depends largely on the age of your vehicle.</span></p>
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<p><span style="color: #000000;">“When cars get about 8 years old or older, that’s the time to start looking at the math for the collision and comprehensive,” Clark says. “At some point, it becomes wiser to just become your own insurance company.”</span></p>
</blockquote>
<p><span style="color: #000000;">The general rule is: If the cost of comprehensive and collision exceeds 10% of your vehicle’s value, that’s the time to dump it and just have liability coverage. You can determine your vehicle’s value at </span><a class="thirstylink" href="https://clark.com/go/cars/edmunds/" target="_blank" rel="noindex noopener noreferrer" data-linkid="126831" data-nojs="false">Edmunds.com</a>,<span> </span><a href="https://www.kbb.com/" target="_blank" rel="noopener noreferrer">KBB.com</a><span> </span><span style="color: #000000;">or</span><span> </span><a href="https://www.nada.com/" target="_blank" rel="noopener noreferrer">NADA.com.</a></p>
<p><span style="color: #000000;">Let’s say you have a 10-year-old vehicle that’s worth only $4,000. The minute that you’re paying north of $400 annually — that’s 10% of $4,000 — for collision and comprehensive, it no longer makes financial sense.</span></p>
<p><span style="color: #000000;">One notable exception to this rule: If there’s no way you could financially cover the loss of your vehicle, forget the math and keep paying for collision and comprehensive.</span></p>
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<h2><span style="color: #000000;"><strong>Final Thought</strong></span></h2>
<p><span style="color: #000000;">If you have an older vehicle, it often doesn’t make sense to carry full coverage on it. That’s because, if you have an accident, the car has so little value that you’re not going to get a big, fat check to replace it. Depending on the vehicle’s age and condition, you may be lucky to get a few hundred or even a thousand dollars.</span></p>
<p><span style="color: #000000;">Of course, there’s an exception to every rule. Let’s say you remove your collision and comprehensive and just a few weeks later you total your car.</span></p>
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<p><span style="color: #000000;">“In that scenario, my advice would prove to be rotten, because you’ll be liable for the expenses on your own,” Clark says. “Statistically it’s unlikely, but it happens.”</span></p>
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