When choosing between liability vs. full-coverage car insurance, it is important to understand the differences between the two. When comparing liability vs. full-coverage car insurance costs, premiums cost $650 and $1,176 annually, respectively. Should you cause an accident, liability insurance can help pay for the other driver’s repairs. Unfortunately, liability does not cover damage to your car. Full-coverage auto insurance is what you need for that level of safety.<\/p>\n\n\n\n
When comparing liability and full-coverage auto insurance, the most notable distinctions are:<\/p>\n\n\n\n
Accidents that hurt other people or damage their property can lead to liability claims. Liability insurance protects you from these claims. Full-coverage auto insurance protects your vehicle in the event of an accident, regardless of who is at fault, as well as for other types of damage. There are a few times when you need full coverage, like when you finance or lease a car, but almost always you need liability insurance.<\/p>\n\n\n\n
The sections below provide a thorough explanation of each type of car insurance coverage to further highlight the distinctions between liability vs. full coverage:<\/p>\n\n\n\n
This is to help cover costs in the event that you are found to be at fault in an accident that results in a third party sustaining bodily injuries or property damages. The intention behind this is to assist in covering those costs in the event that this occurs.<\/p>\n\n\n\n
Insurance companies place caps on various forms of liability protection for vehicles. Limits for bodily injury are calculated separately for each individual and each incident. If an accident causes more financial harm than your policy can cover, you will be responsible for covering the difference. Liability insurance is typically presented as a range of numbers, like 25\/50\/10. So, to break it down:<\/p>\n\n\n\n
There are two different types of coverage included in liability insurance:<\/p>\n\n\n\n
Of the 50 U.S. states, 48 require liability car insurance or something similar, though the amounts and types of coverage needed vary. There are two exclusions: <\/p>\n\n\n\n
There will be a minimum amount of liability insurance that your state requires. In reality, though, the state minimum may not be enough, especially if you cause a big, expensive accident. <\/p>\n\n\n\n
Some states require that you have certain types of coverage on your car, but “full-coverage car insurance” usually means a policy that goes above and beyond what the law requires. In some cases, full-coverage auto insurance may also imply higher limits than what the law or other insurance packages require.<\/p>\n\n\n\n
The term “full coverage” typically refers to the purchase of three different types of insurance:<\/p>\n\n\n\n
In most cases, the combined coverage of collision and comprehensive insurance will be sufficient to pay for the costs of fixing or replacing your vehicle. Depending on the laws in your state and the policies offered by your insurer, complete coverage may also include<\/p>\n\n\n\n
It is important to inquire about what is and is not covered under the policy because full-coverage packages can differ depending on the issuing company. There is no such thing as a one-size-fits-all policy that protects against any and all hazards and contingencies. The use of your vehicle for ride-sharing, for instance, is likely to be an exclusion in your policy that could result in a claim being denied.<\/p>\n\n\n\n
The cost of full-coverage auto insurance is subject to a variety of factors in the same way that the cost of liability coverage is. According to the most recent data provided by the NAIC, the annual premium in the United States averages $1,176, which equates to $98 per month. <\/p>\n\n\n\n
Although there is not a single state that mandates full-coverage auto insurance, having it could be beneficial in the following circumstances: <\/p>\n\n\n\n
Choosing between liability and full-coverage auto insurance? Think about these five things first. <\/p>\n\n\n\n
Find out what kind of insurance your lender requires or what the law mandates. Having liability insurance is a legal requirement in most states. Creditors want full coverage, and sometimes they have specific deductibles. After you have paid off your car, though, your situation and personal preference will determine whether you still need full coverage and what kind of deductible you are comfortable with. Also, keep in mind that collision and comprehensive insurance are two different things. If you only need one of these, you do not have to include the other.<\/p>\n\n\n\n
It is more important to have a diverse coverage portfolio when you have a higher risk of being involved in a collision.<\/p>\n\n\n\n