It is legal for the insurer to only sell liability insurance, even when there is a lien on a car. However, if you paid for or were told you were getting full coverage, you should have been provided it--failure to do so would be breach of contract and/or possibly fraud, so you might have recourse against the insurer. On the other hand, if what you bought was clearly liability-only coverage, then you would not have recourse--you received what you were paying for.