What Does Liability-Only Auto Insurance Cover in Tennessee

• $25,000 bodily injury per person
• $50,000 bodily injury per accident
• $15,000 property damage per accident

Those numbers represent the maximum your insurer will pay per incident. Anything above those limits comes out of your pocket.

Does Liability-Only Cover My Car if Someone Hits Me?

No. If another driver hits you and they're at fault, their liability insurance pays for your damages — not yours. Your liability-only policy only activates when you cause the accident. If the at-fault driver is uninsured or underinsured (which is more common than you'd think), you'd be responsible for your own repair or replacement costs unless you carry separate uninsured motorist coverage.

Tennessee does require insurers to offer uninsured motorist coverage, but you can reject it in writing. Many drivers with liability-only policies decline it to save money, which creates a real gap in protection.

What's NOT Covered Under a Liability-Only Policy

This is where liability-only gets misunderstood. A liability-only policy leaves out several types of coverage that full coverage includes:

• Collision coverage — repairs to your car after an accident you caused
• Comprehensive coverage — damage from theft, vandalism, hail, falling trees, or animal strikes
• Medical payments / personal injury protection — your own medical bills after a crash
• Rental reimbursement — a loaner car while yours is being repaired
• Gap coverage — the difference between your car's value and what you owe on a loan

Nashville's spring storm season is a good reminder of this gap. If a hailstorm damages your car in a parking lot off Broadway or a tree branch falls on it during a storm in East Nashville, liability-only won't pay a dime toward repairs.

When Liability-Only Makes Financial Sense

Liability-only works best in specific situations. It's not a one-size-fits-all answer, but for the right driver, it can be the smart move.

Liability-only is often a good fit when:

• Your vehicle's market value is low (under $5,000 or so)
• You own the car outright — no loan or lease
• You have enough savings to replace the car if it's totaled
• You're driving an older car and collision/comprehensive premiums approach or exceed its value

Liability-only is usually a bad fit when:

• You're financing or leasing (your lender almost certainly requires full coverage)
• You rely on your vehicle for work and can't afford downtime
• You don't have savings to cover a sudden replacement
• Your car has significant market value

A common question from young professionals moving to Nashville is whether they should drop to liability-only to lower their monthly costs. The math matters here. If your car is worth $3,000 and full coverage adds $80/month compared to liability-only, you'd pay $960/year to insure a car that might only be worth three times that. In that scenario, liability-only starts to look reasonable.

Should You Increase Beyond Tennessee's Minimum Limits?

Tennessee's 25/50/15 minimums are low relative to what accidents actually cost in 2026. A single ER visit can exceed $25,000 quickly, and property damage to a newer vehicle can easily surpass $15,000. If you cause an accident that exceeds your policy limits, you're personally responsible for the difference — and that can mean lawsuits, wage garnishment, or liens.

Many drivers find that increasing liability limits from 25/50/15 to 50/100/50 or even 100/300/100 adds relatively little to the premium. The jump from minimum to moderate coverage is often smaller than people expect. We help Nashville-area drivers build customized coverage plans through a Personal Price Plan®, and adjusting liability limits is one of the most common conversations we have.

The Tennessee Department of Commerce & Insurance provides additional resources on state minimum requirements and your rights as a policyholder.

Liability-Only Doesn't Mean Unprotected — But Know the Gaps

Choosing liability-only is a valid decision when the math supports it. The key is making that choice intentionally rather than by default. Know exactly what you're giving up, calculate whether you can absorb those risks, and revisit the decision whenever your car's value or financial situation changes. A car you bought for $4,000 two years ago might only be worth $2,500 now — or you might have upgraded to something worth protecting differently.

If you're not sure where you stand, a quick coverage review takes about fifteen minutes and can clarify whether your current setup still matches your life.