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Liability vs. Full Coverage Car Insurance

Updated
David Chang, ChFC®, CLU®
By: David Chang, ChFC®, CLU®

Our Insurance Expert

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It's important to understand the differences between liability and full coverage car insurance when purchasing and insuring a car. Here's what drivers should know to make an informed decision when selecting car insurance coverage.

What is the difference between full coverage and liability insurance?

When it comes to auto insurance, two common coverage types are liability coverage and full coverage car insurance.

What is liability auto insurance?

Liability car insurance is the most basic type of auto insurance available and is the minimum amount of coverage required by law in most states. It protects the driver from financial loss if they cause bodily injury or property damage to another person. It also covers legal fees for a court trial, up to the policy limits.

What's covered by liability auto insurance?

Liability coverage covers two different types of liability: property damage liability and bodily injury liability. Property damage liability covers property damages incurred in an accident for the other car in which the driver is at fault. Bodily injury liability covers medical expenses for those injured in the other car in which the driver is at fault.

What isn't covered under liability insurance?

Liability coverage does not cover the driver's own vehicle repairs or medical expenses resulting from an accident that the driver caused. Liability insurance does not cover any damage to a driver's own vehicle, other property damage, or medical bills. It also does not provide any of the additional protections offered by full coverage auto insurance policies.

Who needs liability insurance?

Liability only insurance is required by law and covers repair costs for the other party involved in an accident a driver caused up to the maximum amount of the policy. Liability insurance is cheaper than full coverage and is ideal for older cars or low-value cars.

What is full coverage auto insurance?

Full coverage auto insurance, on the other hand, goes beyond liability insurance. It provides additional protection for both drivers and their vehicle. This type of policy includes all the benefits of a liability policy, but adds additional protection.

What's covered by full coverage auto insurance?

Full coverage car insurance goes beyond what is offered by liability policies and will cover damages for all parties involved in an accident, regardless of who is at fault. Full coverage also includes comprehensive and collision coverage, as well as other benefits.

  • Collision coverage pays for repairs to a driver's vehicle after an accident.
  • Comprehensive coverage pays for repairs to a driver's vehicle for non-collision events such as an act of nature, theft, vandalism, and more.

Does full coverage insurance include liability?

Full coverage auto insurance includes all of the components of liability insurance as well as comprehensive and collision coverage. It pays out if the driver is at fault for an accident, as well as for any damage caused by hail, fire, flood, or theft. Depending on the state of residence, it may cover injuries to passengers and medical bills associated with the accident. It is important to check state laws to see what is covered.

Additionally, some full coverage policies provide additional protections such as roadside assistance, rental car reimbursement, uninsured/underinsured motorist protection, emergency road service, and more.

Who needs full coverage insurance?

Whether a driver opts for liability insurance or full coverage auto insurance depends on their individual needs and budget. Anyone who wants extra protection outside of what is provided through their state's mandatory liability requirements should consider purchasing full coverage auto insurance.

It can be especially beneficial if a driver has a newer or more expensive vehicle, as it will cover the cost of repairs if something happens to the car. Additionally, full coverage auto insurance can provide peace of mind knowing that any damages to the car are taken care of, regardless of who is at fault.

Liability vs. full coverage insurance cost

Currently the average annual cost of auto insurance in the U.S. is $3,017. The average annual cost of a liability-only policy is $787 and the average annual cost for a comprehensive policy is $3,296.

With a full coverage policy over four times more expensive than a liability-only one, it is essential to compare quotes from different insurers to ensure a driver is getting the most value for their money.

When choosing a car insurance policy, it's important to understand the difference between liability and full coverage car insurance. This will help drivers choose one that best meets their needs. Liability policies provide basic protection from expenses incurred in an accident where the driver is at fault. Full coverage policies, on the other hand, offer additional benefits such as collision and comprehensive coverage. Ultimately, it's up to the driver to decide how much protection is necessary for their situation.

FAQs

  • Full coverage provides additional protection for both the driver and their vehicle. It provides extra coverages not included in basic liability policies, like comprehensive and collision. This can help pay for repairs after an accident or if a car is damaged due to theft or vandalism.

  • Ultimately, the decision between liability versus full coverage comes down to personal preference and finances. It is important to weigh the options carefully and assess what type of coverage is best suited for the driver and their lifestyle.

  • It is important to note that full coverage may not be right for everyone. People who don't drive often or own older vehicles may find that purchasing liability-only insurance is a better option. However, those who do have newer vehicles or high-value cars may want to get full coverage since it provides more protection and peace of mind.

  • When it comes to dropping full coverage on a car, the best time to do so is when the cost of repairs or replacement is more than the value of the vehicle. The decision to drop full coverage should be based on comfort level with risk and one's budget.

Our Insurance Expert