Liability vs. full coverage: a simpler decision than it looks

Insurance jargon makes this decision sound complicated. It mostly isn't. Strip away the terminology and you're answering one question: is your car worth paying to protect?

The two coverages, in one breath each

• Liability (required in California, minimum 30/60/15): pays for injuries and damage you cause to others. Never touches your own car.
• Full coverage (liability + comprehensive + collision): adds protection for your own car — collisions you cause, theft, vandalism, fire, falling branches, the mysteries of parking lots.

The shortcut that settles most cases

Compare your car's current market value against what comprehensive + collision cost you per year, plus your deductible. As the car's value falls, there's a crossover point where the coverage can no longer pay out enough to justify its price. A $3,500 car with a $500 deductible and $700/year of comp/collision is at — or past — that point. A $28,000 SUV is nowhere near it.

What people get wrong in both directions

• Over-insuring the car, under-insuring themselves. Drivers with real savings or a home keep state-minimum liability to save money while paying to protect a $6,000 car. Backwards: one serious at-fault accident threatens your assets far more than your car's value. Raising liability limits is usually cheap; a lawsuit isn't.
• Dropping everything on a car they can't replace. Liability-only "saves money" until the car dies in an accident and there's no budget to replace it. If losing the car would be a crisis, that's an argument for keeping collision even on a modest vehicle.

The California extra: uninsured motorist

A meaningful share of California drivers carry no insurance at all. Uninsured/underinsured motorist coverage protects you and your passengers when one of them hits you. It's inexpensive, and most agents rank it among the highest-value coverages on the menu — whichever side of the liability/full-coverage line you land on.