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Full Coverage vs Liability Car Insurance – Know the Difference

Are you in the process of exploring car insurance options? If so, it is important to understand the difference between full coverage and liability insurance to help you make informed decisions for your vehicle. Here’s a quick guide to help you.
Full Coverage vs Liability Car Insurance
Full Coverage vs Liability Car Insurance – Know the Difference
Full coverage car insurance goes beyond minimum legal requirements, usually including collision and comprehensive coverage. On the other hand, liability car insurance helps pay for damages when you're responsible for an accident that results in bodily injuries or property damage to others. Read on to understand the difference.
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Car insurance is indispensable for responsible vehicle ownership. It offers financial protection against unexpected road incidents. One must consider two primary options when selecting car insurance: full coverage and liability car insurance.

Full coverage encompasses liability, collision and comprehensive coverages, ensuring a complete shield against various risks and unforeseen road incidents. On the other hand, liability insurance addresses damages to others and their property.

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To make a well-informed decision and bolster security on road, it is important to understand individual needs, vehicle value, and financial circumstances. By knowing the basic difference between these two insurance options, you can confidently choose a plan for yourself.

Difference Between Full Coverage vs Liability Car Insurance

Are you in the process of exploring car insurance options? If so, it is important to understand the difference between full coverage and liability insurance to help you make informed decisions for your vehicle. Here’s a quick guide to help you:

AspectLiability Car InsuranceFull Coverage Car Insurance
Coverage TypeIt covers damages to others if you’re at fault.It includes liability, collision, comprehensive, and other coverages. Covers damages to others and your vehicle.
What’s CoveredOther driver’s bodily injuries; Other people’s property damage you cause.Other driver’s bodily injuries; Property damage you cause to others; Damage to your car from collision and non-collision sources.
LimitsMeets minimum state-required coverage limits.There may be higher liability coverage limits, collision, and comprehensive limits based on the car’s value.
Average Annual Cost$631 (approximate).$1,176 (approximate).
Mandatory RequirementIt is compulsory in most states.Required when financing or leasing a vehicle; some jobs may require full coverage.
DeductibleNoneRanges from $100 to $2,000; set by lender.
RecommendedAlwaysIf you have an auto loan, your car is high-value, you don’t want to pay repair costs out of pocket, you’re likely to file a damage claim, or you want extra coverage.

This table covers all the key differences between the two types of car insurance, aiding individuals in making informed decisions about their coverage options.

Full Coverage Car Insurance

Full coverage car insurance goes beyond minimum legal requirements, usually including collision and comprehensive coverage.

While not universally defined, it implies protection beyond liability, addressing accident damages and non-collision incidents like theft or natural disasters. Additionally, it may offer higher liability limits and optional add-ons for added road protection.

What is Covered in Full Coverage Car Insurance?

Let’s understand these components ensure comprehensive protection for you, your passengers, and your vehicle in points.

Collision Coverage: This facet of full coverage car insurance pertains to damages incurred by your vehicle in accidents, irrespective of fault. It covers repair costs or the replacement value of your car, offering financial protection against collision-related expenses.

Comprehensive Coverage: Unlike collision coverage, comprehensive insurance safeguards your vehicle from damages not stemming from collisions. It encompasses incidents like theft, vandalism, natural disasters (e.g., floods, fires), and encounters with animals.

Higher Liability Limits: While states mandate minimum liability coverage, full coverage often entails higher limits, ensuring more excellent financial protection against bodily injury and property damage liabilities resulting from accidents you cause.

Personal Injury Protection (PIP) or Medical Payments: PIP or medical payments coverage compensates for medical expenses incurred by you and your passengers in the event of injuries sustained during accidents, regardless of fault.

Uninsured/Underinsured Motorist Coverage: This facet of full coverage insurance shields you from financial losses caused by uninsured or underinsured drivers. It helps cover damages to your vehicle and medical expenses when the at-fault party lacks adequate insurance.

Optional Add-Ons: Full coverage policies often offer optional add-ons for enhanced protection. These may include roadside assistance, rental car reimbursement, and gap coverage, which covers the difference between your car’s actual value and what you owe on a loan or lease if it’s totaled.

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What is Not Covered?

Let’s understand what can be excluded from full coverage car insurance.

Exclusions: Full coverage car insurance policies may contain exclusions specifying circumstances or situations where coverage is not applicable. These exclusions could include using your vehicle for commercial purposes or engaging in illegal activities.

Coverage Limits: Despite having full coverage, there are limitations to the extent of protection provided. If the expenses incurred exceed the coverage limits of your policy, you may be responsible for paying the remaining costs out of pocket.

Policy Variations: The specifics of coverage vary between insurance companies and states. Therefore, it’s essential to understand the nuances of your policy, including any limitations or restrictions that may apply to specific situations or types of damage.

Being aware of what is not covered under your full coverage car insurance policy helps you understand potential gaps in protection and take necessary precautions to mitigate risks on the road.

Liability Car Insurance

Liability car insurance helps pay for damages when you’re responsible for an accident that results in bodily injuries or property damage to others.

What is Covered in Liability Car Insurance?

Auto insurance companies establish limits for each type of liability coverage. These limits dictate the maximum amount the insurance company will pay for bodily injury or property damage claims per person and accident.

Bodily Injury Liability Coverage: This aspect of liability insurance kicks in when you’re responsible for an accident that injures others. It covers expenses such as medical bills, loss of income due to injuries, and legal fees if the injured party files a lawsuit against you. Additionally, it compensates for the pain and suffering endured by the injured individuals.

Property Damage Liability Coverage: Property damage liability coverage addresses the costs associated with repairing or replacing damaged property resulting from an accident you caused.

This could include vehicle repairs, structures like mailboxes, or other accident-related property. In addition to covering repair expenses, this part of liability insurance may also cover legal fees if you’re sued for property damage caused by the accident. If the costs of damages exceed these limits, you will be responsible for paying the remaining expenses out of pocket.

People Also Read : What Happens if You Crash a Financed Car with Insurance 

What is Not Covered?

Here are some points dictating what is not covered in Liability Care Insurance.

  • Costs for injuries sustained by you or passengers in your vehicle.
  • Repairs to your car resulting from an accident where you are at fault.
  • Damages caused to your car by uninsured or underinsured drivers.
  • Claims that exceed the liability limits set by your insurance policy.

Conclusion

Careful consideration is required when you choose between full coverage and liability car insurance. Full coverage offers comprehensive protection but comes with higher premiums and deductions.

Whether liability insurance provides basic coverage at a more affordable price, equipped with potential risk in accidents. While asking for coverage, the decision depends on factors like budget, risk tolerance, driving habits, and vehicle value. A regular review and adjusting coverage ensures adequate protection. Understanding these differences empowers drivers to make informed decisions for financial security and peace of mind.

FAQs

Is full coverage car insurance mandatory?

Full coverage car insurance is not legally mandatory, but lenders may require it for car loans or leases. If you own your car outright, you can decide whether to get full coverage or just liability insurance. Full coverage provides more protection, covering damage to your own car, not just others’.

Can I switch from full coverage to liability insurance on my car?

You can switch from full coverage to liability insurance, but consider factors like your car’s value and risk tolerance. If your car is older or not worth much, liability insurance might be enough. However, full coverage can give you peace of mind in case of an accident.

How does the cost of full coverage compare to liability-only coverage?

Full coverage is generally more expensive due to additional protections like collision and comprehensive coverage.  Liability-only coverage is cheaper because it only covers damage you cause to others. Think about what coverage you need and how much you will pay.

Should I choose full coverage or liability insurance for an older car?

It depends on your car’s value and your financial situation. Liability may suffice for older cars with low value.  Full coverage might be a better choice if your car is still valuable or you want extra protection. Consider your budget and needs when deciding.

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Author

Picture of Aniket Kulkarni

Aniket Kulkarni

A seasoned Product Manager specializing in car insurance content, Aniket has a passion for simplifying complex insurance concepts. His strategic approach to content development reflects years of experience in the product development industry, coupled with a commitment to providing accurate, reliable information.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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