When finding the right car insurance policy for you, it’s important to understand the different types of coverage and how much you need. This includes whether you want liability or full-coverage car insurance.<\/p>
Liability-only insurance pays for injury and damage to others you’re responsible for. In comparison, full-coverage policies cover both your liability and property damage to your own vehicle.<\/p>
Liability car insurance is the part of a car insurance policy that provides financial protection for a driver who harms someone else or their property while operating a vehicle. Car liability insurance only covers injuries or damages to third parties and their property\u2014not to the driver or the driver\u2019s property, which may be separately covered by other parts of their policy.<\/p>
The two components of liability car insurance are bodily injury liability and property damage liability. Every state except New Hampshire requires drivers to have some degree of liability coverage.<\/p>
Liability car insurance helps cover the cost of damage resulting from a car accident. In many states, if a driver is found to be at fault in the accident, their insurance company will pay the property and medical expenses of other parties involved in the accident up to the limits set by the policy.<\/p>
For states with no-fault auto insurance, however, drivers involved in an accident must first file a claim with their own insurance companies regardless of who was at fault. In those states, drivers are typically required to purchase personal injury protection (PIP) coverage, which covers their accident-related medical expenses as well as those of their passengers.<\/p>
Liability car insurance consists of two types of coverage:<\/p>
The bodily injury liability portion of a car insurance policy covers an at-fault driver, so they are not liable for others\u2019 emergency and ongoing medical expenses, loss of income, or funeral costs. It also helps cover the policyholder\u2019s legal fees when the accident results in a lawsuit.<\/p>
Property damage liability helps cover the costs of repairing or replacing the vehicles of other drivers involved in the accident. It also covers the damage done to other forms of property by the policyholder\u2019s vehicle, such as fencing, mailboxes or buildings.<\/p>
Liability insurance includes two coverage types:<\/p>
Auto insurance providers set coverage limits on each liability coverage type. Bodily injury limits rely on a per-person and per-accident basis. If damages from an accident exceed your limits, then you\u2019ll be responsible for the difference. <\/p>
Your liability car insurance policy won\u2019t cover: <\/p>
The liability car insurance cost depends on location, driving record, age, and claims history. The average premium for liability coverage nationwide was $631, or about $52 per month, in 2020, according to a National Association of Insurance Commissioners (NAIC) report published in 2023.<\/p>
The term \u201cfull coverage car insurance\u201d does not refer to an actual policy type, but rather a policy that consists of liability, collision and comprehensive car insurance.<\/p>
While liability is required in most states, collision and comprehensive car insurance is optional. However, if you have a lease or loan for your vehicle, your lender likely requires you to buy comprehensive and collision coverage.<\/p>
Comprehensive and collision are separate coverage types but are often sold together. Both come with a deductible, which is the amount deducted from an insurance claim check. The maximum payout for both is the actual cash value of your vehicle, or how much it\u2019s worth right before it\u2019s totaled, minus the deductible.<\/p>
Here\u2019s what they cover:<\/p>
Your lender will likely require full-coverage car insurance when you take out a car loan, but it\u2019s not a policy type offered by insurers. Instead, \u201cfull coverage\u201d usually means you need to purchase liability coverage along with these two coverage types:<\/p>
Together, collision and comprehensive policies help to cover the costs of repairing or replacing your vehicle in most scenarios. Based on your state or insurer, full coverage for a consumer could also include:<\/p>
Full-coverage packages vary by the issuing company, so ask what is and is not included in the policy. There isn\u2019t a universal full-coverage policy that covers every possible risk or situation. For example, your policy will likely contain exclusions that could lead to a claim denial\u2014such as using your car for ride-sharing.<\/p>
Like liability coverage, the price of full-coverage car insurance also depends on various factors. The average annual premium nationwide is $1,176, or $98 per month, according to the latest data from the NAIC.10<\/p>
To find the best deal, it\u2019s best to shop around and get quotes from a few reputable insurers.<\/p>
| <\/td> | Liability Car Insurance<\/strong><\/td>| Full-Coverage Car Insurance<\/strong><\/td><\/tr> | Typically Covers<\/strong><\/td> | \u2022 Other driver\u2019s bodily injuries | \u2022 Other people\u2019s car or property damage you cause<\/td> \u2022 Other driver\u2019s bodily injuries | \u2022 Property damage you cause to others \u2022 Damage to your car from collision and non-collision sources<\/td><\/tr> Limits<\/strong><\/td> | Meets minimum state-required coverage limits<\/td> | May have higher coverage limits for liability coverage; collision and comprehensive limits based on the car\u2019s actual value<\/td><\/tr> | Average Cost (annual)<\/strong>1<\/td> | $631<\/td> | $1,176<\/td><\/tr> | Mandatory<\/strong><\/td> | In most states<\/td> | Only when you finance or lease a vehicle; some jobs may also require full-coverage car insurance<\/td><\/tr> | Deductible<\/strong>2<\/td> | None<\/td> | A deductible is due when filing a claim on a collision or comprehensive policy claim, ranging from $100 to $2,500; the deductible may be set by your lender.<\/td><\/tr> | Recommended<\/strong><\/td> | Always<\/td> | If: | \u2022 You have an auto loan \u2022 Your car is high-value \u2022 You don\u2019t want to pay repair costs out of pocket \u2022 You\u2019re likely to file a claim for damage \u2022 You want extra coverage<\/td><\/tr><\/tbody><\/table><\/figure> Which is required?<\/strong> Liability or Full-Coverage Car Insurance<\/strong><\/span><\/h2> |