Liability-Only vs Full Coverage: Break-Even Calculator Guide
Choosing between liability-only and full coverage is really a math problem wrapped inside your risk tolerance. This guide gives you a simple, numbers-first way to decide when full coverage pays off and when liability-only is the smarter buy. You will see real market averages, a step-by-step break-even calculator, and practical examples that cover older cars, newer financed cars, and everything in between.
Rates have been under pressure as claim severity rose with higher parts and labor costs, plus more complex vehicles and a higher share of total-loss outcomes in recent years. Independent claims data points to 2024 repair costs still climbing, with labor rates up and total-loss share hitting record territory in some snapshots. [ref]
Quick definitions you can trust
- Liability-only pays others for injuries and property damage when you are at fault. States mandate liability in some form.
- Full coverage is a shorthand for a policy that includes liability + collision + comprehensive. Collision and comprehensive repair or replace your car, subject to deductibles, and are usually required by lenders on financed or leased vehicles. [ref]
What people are actually paying right now
Realistic national averages help you anchor your expectations:
| Coverage Type | Typical U.S. Average | Notes |
|---|---|---|
| Full coverage (liability + comp + collision) | $2,308 / year | Based on an October 2025 national analysis of rates |
| Minimum liability only | $627 / year | State minimums differ widely |
Source: NerdWallet’s 2025 average rate study. Your price will vary by age, driving record, garaging ZIP, vehicle, coverages, and discounts. Other trackers sometimes show higher national averages, which reinforces the idea that you should compare multiple carriers before deciding. [ref]
The break-even calculator
The calculator compares the extra cost of carrying comprehensive and collision against the expected benefit you get if your car is damaged or totaled.
Inputs you need
- Vehicle Actual Cash Value (ACV): what your car would sell for today.
- Deductibles: one for collision, one for comprehensive.
- Annual premium for liability-only vs full coverage premium.
- Your risk picture: a rough annual probability of a loss that would trigger collision or comprehensive.
Core idea
Decision rule: Extra premium for full coverage ≤ Expected annual benefit
Where:
- Maximum collision payout ≈ ACV − collision deductible
- Maximum comp payout ≈ ACV − comp deductible
If the extra premium is large compared to those maximums, the odds it pays off shrink for you personally.
A worked example
Scenario: Your 9 year old car has an estimated ACV of $6,500. You carry $500 deductibles on both collision and comp. Your quotes:
- Liability-only: $650 / year
- Full coverage: $1,850 / year
- Extra cost for comp + collision = $1,200 / year
Maximum collision payout: $6,500 − $500 = $6,000
Maximum comp payout: $6,500 − $500 = $6,000
Ask two questions:
-
How many claim-free years would it take before premiums equal the max payout
$6,000 ÷ $1,200 ≈ 5 years. -
What is the realistic chance of a claim that gets past your deductible each year
You are trading a steady cost for protection from a low to moderate probability, high impact loss.
If you expect to keep the car less than 5 years, have a healthy emergency fund, and can live with the risk of losing a $6,500 asset, liability-only starts to look reasonable. If a total loss would strain your finances, the certainty of full coverage may still be worth it.
A quick visual pause and a useful tip
When you compare quotes, double check your garaging address, VIN, and estimated annual miles. These inputs strongly influence your premium. Correcting them after binding can change your price, so accuracy up front saves you from surprises.
Rule-of-thumb guardrails
These rules will not replace the calculator, but they speed up decision making:
Loan or lease
Lenders usually require collision and comprehensive until the note is paid off. Skipping them can violate your contract and trigger force-placed coverage that costs more for less protection. [ref]
Cannot easily replace the car
If a total loss would derail your budget, first party coverage is valuable. Repair bills have been pushed up by labor rates and parts complexity, which makes self-insuring a tougher call for many households. [ref]
Low ACV and high premiums
When combined collision and comprehensive premiums are a large slice of your car’s ACV, dropping one or both can make sense. Many drivers revisit coverage once ACV dips below a few thousand dollars or when annual premiums approach ten percent of ACV.
Mini-calculator you can copy into your notes
Step 1: Write down your numbers
- ACV:
_________ - Collision deductible:
_________ - Comprehensive deductible:
_________ - Liability-only premium (annual):
_________ - Full coverage premium (annual):
_________
Step 2: Compute
- Extra premium for full coverage = Full − Liability =
_________ - Max collision payout = ACV − collision deductible =
_________ - Max comp payout = ACV − comp deductible =
_________
Step 3: Sense-check
- Years for premiums to equal a max payout =
(ACV − deductible) ÷ Extra premium - If you plan to keep the car fewer years than this, liability-only may be efficient.
- If a loss would seriously disrupt your finances, keep full coverage.
A table you can edit for your own car
Replace the example numbers with your quotes to see where you land.
| Item | Example | Your Numbers |
|---|---|---|
| ACV (today) | $6,500 | _________ |
| Collision deductible | $500 | _________ |
| Comprehensive deductible | $500 | _________ |
| Liability-only premium | $650 / year | _________ |
| Full coverage premium | $1,850 / year | _________ |
| Extra cost for comp + collision | $1,200 / year | _________ |
| Years for premiums to equal a max payout | ≈ 5 years | _________ |
Situational examples
Older paid-off commuter
ACV is modest and premiums for comp + collision are high relative to value. If five or more claim-free years of extra premium would equal a likely payout, many drivers choose liability-only and set aside a repair fund.
Newer financed vehicle
Lender requires comp and collision. You may also consider GAP if you owe more than ACV. See our GAP explainer to understand when the math favors adding it.
High deductible strategy
Raising deductibles from $500 to $1,000 lowers premium for full coverage. If the savings are meaningful and you can cover the higher out-of-pocket, this can be a good middle path. Start with our deductible comparison.
Related guides on our site
- Coverage building blocks explained in Comprehensive vs Collision.
- Discounts and first-policy ideas in Cheap Car Insurance for New Drivers.
- Want wallet-ready proof after purchase Instant Auto Insurance ID Cards.
- Payment strategy ideas in Pay in Full vs Monthly Auto Insurance.
One reputable external reference
For a clear, data-driven snapshot of average prices by coverage level, check this national analysis:
NerdWallet: Average Cost of Car Insurance. It lists $2,308 for full coverage and $627 for minimum liability as of October 2025. Compare your quotes against these figures and keep shopping if you are far above similar profiles in your area. [ref]
If you want a second source for context, Bankrate’s trackers show a higher national average in 2025, which is a healthy reminder that quoting more than one company matters. [ref]
Bottom line
Use the break-even method to decide with confidence:
- Get two quotes: liability-only and full coverage.
- Subtract to find the extra annual cost of comprehensive and collision.
- Compare the extra cost to your car’s ACV minus deductibles and your ownership horizon.
- Layer in lender rules and your emergency fund.
If the extra premium would take many years to equal a realistic payout, and losing the car would not break your finances, liability-only can be sensible. If a total loss would be painful or you still owe on the car, full coverage is often worth keeping.