Liability vs Full-Coverage Car Insurance: An In-Depth Comparison

Liability vs Full-Coverage Car Insurance

Car insurance is a critical consideration, and understanding the nuances of liability versus full-coverage options is key. Let’s delve into the details to help you make an informed decision.

Key Takeaways:

• Liability insurance addresses costs for damages caused to others in an accident, excluding damage to your vehicle.
• Full-coverage is an umbrella term for a combination of liability, collision, comprehensive coverage, and additional coverages or higher limits.
• Liability is mandatory in most states, while full coverage is typically required for financed or leased vehicles and certain job positions.

 

Difference Between Liability and Full-Coverage Car Insurance

Below is the Liability vs Full-Coverage Car Insurance In-Depth Comparison:

Liability Car Insurance	Full-Coverage Car Insurance
– Covers other driver’s bodily injuries	– Covers other driver’s bodily injuries
– Covers other people’s property damage you cause	– Covers property damage you cause to others
– Limits meet state-required coverage limits	– May have higher coverage limits for liability; collision and comprehensive limits based on the car’s actual value
– Average Cost (annual): $631	– Average Cost (annual): $1,176
– Mandatory in most states	– Only required for financed or leased vehicles; some jobs may require full-coverage
– No deductible	– Deductible required for collision or comprehensive claims, ranging from $100 to $2,500; set by your lender
– Recommended always	– Recommended if you have an auto loan, high-value car, prefer not to pay repair costs out of pocket, likely to file claims, or seek extra coverage

 

Liability Car Insurance

What Is Covered:

• Bodily Injury Liability Coverage:
  • Covers medical bills, loss of income, legal fees, and pain and suffering for injured parties.
• Property Damage Liability Coverage:
  • Covers repair or replacement costs for damaged property, including legal defense if sued.

 

What Is Not Covered:

• Costs for injuries to you or your passengers.
• Repairing your car due to at-fault accidents.
• Damages caused by uninsured or underinsured drivers.
• Claims exceeding your insurance liability limit.

 

Price:

• Average premium for liability coverage: $631 annually (2020).

Is It Required?

• Mandatory in 48 U.S. states; exceptions in New Hampshire and Virginia with specific conditions.

 

Full-Coverage Car Insurance

What Is Covered:

• Collision Coverage:
  • Repairs or replaces your vehicle after an accident.
• Comprehensive Coverage:
  • Covers non-collision damage like floods, fires, theft, and falling tree branches.

 

What Is Not Covered:

• Coverage varies by insurer; exclusions like using your car for ride-sharing may apply.

Price:

• Average premium for full-coverage: $1,176 annually (latest data).

Is It Required?

• Necessary for financed or leased vehicles; may be required by some employers.

 

Liability vs. Full-Coverage Car Insurance: Which Should You Choose?

1. Mandatory Requirements:

Liability is typically required by states, while full coverage may be demanded by lenders or employers.

2. Risks and Risk Tolerance:

Evaluate accident history, driving frequency, and exposure to potential risks to determine the need for comprehensive coverage.

3. Premiums:

Full coverage comes at a higher cost, but the increased protection justifies the expense.

4. Limits:

Liability limits can be chosen, while comprehensive and collision limits depend on the car’s value.

5. Car Value:

Consider your vehicle’s value when deciding if the insurance costs justify potential repair or replacement expenses.

 

FAQs

Does Liability Insurance Cover My Car If I Have an Accident?

No, liability insurance covers costs for others. Your car damage is not covered unless the other driver is at fault.

 

Does Full Coverage Cover At-Fault Accidents?

Yes, full-coverage covers the cost to repair or replace your vehicle in at-fault accidents, but may not cover bodily injuries without additional coverage.

 

When Should I Drop Full Coverage?

Drop full coverage when your vehicle is paid off, and costs outweigh benefits, such as repair costs exceeding the car’s value.

Also, check: How to Find the Right Car Insurance: Best Tips

 

The Bottom Line

Liability insurance is essential, often legally required, and cost-effective. Full coverage, while more expensive, offers comprehensive protection, making it necessary for financed vehicles or those with a high risk of damage. The choice between them depends on your financial situation, risk tolerance, and the value of your vehicle.

In summary, while liability insurance is focused on covering damages you cause to others, full coverage insurance provides a broader spectrum of protection. It includes liability coverage but also encompasses coverage for your own vehicle and additional benefits to safeguard you against various risks on the road.

Keep in mind that the term “full coverage” doesn’t mean your policy covers every conceivable scenario; specific coverage options may vary by insurer and policy. Always carefully review your policy to understand the extent of your coverage.