What’s the Difference Between Liability Insurance and Full Coverage Car Insurance?
The main difference between liability insurance and full coverage insurance is that liability-only insurance just covers damage and injuries you cause to others if you are at fault in an accident. Full coverage includes liability plus collision and comprehensive coverage that pays for damage to your own vehicle.
What Does Liability Car Insurance Cover?
Liability car insurance covers bodily injury and property damage you are legally liable for if you cause a car accident. The bodily injury portion pays for medical bills, lost wages, pain and suffering, and legal fees if you are sued. The property damage portion covers repair costs for the other driver’s vehicle and other property like fences or buildings.
What is Not Covered by Liability Insurance?
Liability insurance does not cover damage to your own vehicle, your medical bills or lost wages, or damage caused by theft, vandalism, animals, or weather events. It also does not cover your legal fees if you are sued. Additionally, liability insurance does not cover damage caused by drivers who don’t have insurance or lack sufficient coverage.
What is Included in Full Coverage Car Insurance?
Full coverage car insurance is not actually a specific type of policy. Instead, it typically refers to policies that include bodily injury liability, property damage liability, collision, and comprehensive coverage. It may also include higher liability limits than the state minimums and other coverage like personal injury protection, uninsured/underinsured motorist coverage, and medical payments. However, the exact coverages can vary by insurer.
What Other Car Insurance Coverages are Available?
In addition to liability and full coverage, there are several other optional car insurance coverages to consider:
- Personal Injury Protection (PIP) or Medical Payments (MedPay): Covers medical bills for you and your passengers after an accident, regardless of fault.
- Uninsured/Underinsured Motorist Coverage: Protects you if you’re hit by a driver with no insurance or insufficient coverage.
- Gap Insurance: If your car is totaled, this pays the difference between the vehicle’s value and what you still owe on your auto loan or lease.
- Rental Reimbursement: Pays for a rental car while your vehicle is being repaired after a covered accident.
- Roadside Assistance: Covers services like towing, jump starts, lockout service, and flat tire changes.
The availability of these optional coverages varies by state and insurer. An agent can explain your options and help determine what coverages fit your needs and budget.
How Much Does Liability Insurance Cost Compared to Full Coverage?
On average nationwide, liability-only car insurance costs around $650 per year, while full coverage costs about $1,204 per year according to the National Association of Insurance Commissioners. The price difference reflects the additional financial protection provided by collision and comprehensive coverage. However, the exact costs will vary based on factors like your location, vehicle, driving record, and selected coverage limits.
When is Liability Insurance Required vs Full Coverage?
Liability insurance is required in almost every state, although the mandatory minimum limits vary. Full coverage is typically required by lenders when you have an auto loan or lease, to protect their financial interest in the vehicle. Once the vehicle is paid off, collision and comprehensive coverage become optional. However, you may still want full coverage for newer, high-value vehicles that would be expensive to repair or replace out of pocket.
Should I Choose Liability or Full Coverage Car Insurance?
Whether to get liability-only or full coverage depends on your specific situation. Consider your vehicle’s value, your ability to pay for repairs yourself, your risk tolerance, and your budget. Liability insurance is cheaper but leaves you financially exposed if your car is damaged. Full coverage costs more but provides peace of mind. An insurance agent can help assess your needs and craft a policy that provides the right protection for you.
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