Unlimited Vs Limited: Auto Insurance Coverage Explained

When it comes to auto insurance, there are two main types: unlimited (or full) insurance and limited (or liability-only) insurance. The main difference between the two is the level of coverage they provide. Unlimited insurance offers more comprehensive coverage, protecting you, your vehicle, and others in the event of an accident. On the other hand, limited insurance only covers damage to others and their property, excluding protection for your own vehicle. While limited insurance is cheaper, unlimited insurance provides greater peace of mind and financial protection in the event of a claim.

Full coverage includes liability, comprehensive and collision insurance

Full coverage auto insurance is a comprehensive policy that includes liability, collision, and comprehensive insurance. It offers more robust protection than liability-only insurance, covering both your liability and property damage to your own vehicle. While liability insurance covers the cost of injuries and damage caused to others in an accident, full coverage also protects your vehicle from collision and non-collision damage.

Liability insurance is a mandatory minimum requirement in most states and covers bodily injury liability and property damage liability. Bodily injury liability covers the injuries of another party in an accident you cause, while property damage liability covers damage to another person's property, such as their vehicle or fence. However, liability insurance does not cover damage to your own car or injuries sustained by yourself or your passengers.

Full coverage insurance, on the other hand, includes collision and comprehensive coverage. Collision insurance covers damage to your vehicle in a collision with another vehicle or object, regardless of who is at fault. Comprehensive insurance, often referred to as "other-than-collision" coverage, pays for repairs in non-collision incidents, including vandalism, weather damage, fire, theft, and animal strikes.

Full coverage insurance is generally more expensive than liability-only insurance, as it provides more extensive financial protection. It is often required when a vehicle is financed or leased to guarantee that the owner can pay off a portion of the loan if the car is totaled. Additionally, full coverage may be necessary to qualify for certain endorsements, such as car rental reimbursement coverage and roadside assistance.

When deciding between liability and full coverage, it is essential to consider your financial situation, the value of your vehicle, and your tolerance for risk. While full coverage offers more comprehensive protection, it may not be necessary if your vehicle is older or if you can comfortably afford to replace or repair it in the event of an accident.

Liability insurance only covers damage and injuries caused to others

Liability insurance policies cover any legal costs and payouts for which the insured party is responsible if they are found legally liable. This includes legal expenses if the insured is sued. However, intentional damage and contractual liabilities are generally not covered by liability insurance policies.

Liability insurance is typically called third-party insurance because, unlike other types of insurance, liability insurance policies pay third parties (those who have suffered damage or injury), and not the policyholder.

In the context of auto insurance, liability insurance covers damage to other cars, buildings, and structures like fences and telephone poles. It does not cover injuries to the insured person or damage to their car. For that, one would need comprehensive and collision coverage.

Liability insurance is required in most states for auto insurance and is also mandatory for product manufacturers, and anyone who practices medicine or law.

Full coverage offers protection for your vehicle as well

Full coverage auto insurance offers protection for your vehicle as well as for others. It includes liability insurance, which covers damage to other vehicles or injuries to other people when you're driving, and protection to cover damage to your own vehicle. This includes damage caused by collisions with other vehicles or objects, regardless of who is at fault, and non-collision incidents like vandalism, theft, weather, natural disasters, and falling objects.

Full coverage typically includes higher liability limits than the state requirement, providing more financial protection if you cause an accident and need to pay another driver's medical bills or repair their car. It also covers the cost of repairs to your car up to its cash value at the time of the collision. If you are more than 50% at fault for the accident, the insurance company will pay to repair your car minus your deductible.

Full coverage is often required when you lease or finance a vehicle. It is also recommended if you cannot comfortably afford to replace or repair your car if it is destroyed, stolen, or damaged. While it is more expensive than liability-only insurance, full coverage can provide peace of mind and protect you financially.

Limited tort insurance is cheaper but has restricted compensation

Limited tort insurance is a cheaper option than full tort insurance, but it comes with restricted compensation. While full tort insurance allows the policyholder unrestricted rights to sue an at-fault driver for damages, limited tort insurance has several limitations on what can be claimed.

Limited tort insurance only allows the policyholder to sue for monetary damages, such as medical expenses and loss of income. On the other hand, full tort insurance allows the policyholder to sue for non-monetary damages like pain, suffering, and emotional distress, in addition to monetary damages. This is a significant difference, as non-monetary damages can provide much-needed compensation for the physical and emotional trauma caused by an accident.

The ability to claim for pain and suffering is not restricted under full tort insurance. However, under limited tort insurance, the policyholder can only claim for pain and suffering if their injuries are severe. Severe injuries typically include situations where the accident results in a serious impairment that prevents the policyholder from working, a permanent disability or deformity, or the loss of a limb. Additionally, if the at-fault driver was under the influence of drugs or alcohol, or if the accident was intentional, the policyholder may be able to claim for pain and suffering under limited tort insurance.

The choice between full and limited tort insurance depends on the policyholder's risk tolerance and financial situation. Full tort insurance provides broader financial reimbursement and is, therefore, a better option if the policyholder can afford it. Limited tort insurance, while cheaper, may result in more out-of-pocket expenses in the event of a serious accident.

Full tort insurance is more expensive but has unrestricted compensation

Tort insurance is available in at-fault states, where the driver who caused the accident is held financially responsible for damages and injuries caused to others. In these states, drivers who want the most flexibility in pursuing legal recourse after a car accident can opt for tort insurance.

Full tort insurance is more expensive than limited tort insurance, but it allows you to sue an at-fault driver without restrictions for pain and suffering, lost income, vehicle repairs, and other non-monetary losses. This means that you can recover the full amount of damages, including non-economic damages such as emotional distress or physical pain. Limited tort insurance, on the other hand, restricts your ability to sue for non-economic damages unless your injuries meet certain severity thresholds.

Full tort insurance provides the opportunity for broader financial reimbursement if you're involved in a serious accident. For example, if you can no longer participate in active hobbies or sports due to your injuries, you can sue the at-fault driver for damages with full tort insurance. Additionally, if you have dependents who rely on you financially, full tort coverage may be worth considering as it allows you to sue for non-medical expenses as well as injuries.

Limited tort insurance is a more affordable option, but it's important to remember that it may result in more out-of-pocket expenses in the future if you're severely injured and unable to claim pain and suffering damages. With limited tort coverage, you can still sue for monetary damages such as medical expenses and loss of income, but your ability to seek compensation for non-monetary issues is limited.

Frequently asked questions