Full Coverage Vs Liability: Which Auto Insurance Is Best?

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When it comes to auto insurance, there are two main types: liability and full coverage. Liability insurance covers injuries and damage to others in the event of an accident, and it is usually required by law. On the other hand, full coverage includes liability insurance as well as protection for damages to your own vehicle, whether caused by collisions or other incidents like fires or vandalism. While it is not an actual insurance policy, full coverage is often required by lenders if you lease or finance your vehicle. Ultimately, the decision between liability and full-coverage auto insurance depends on factors such as the age and value of your car, your financial situation, and your tolerance for risk.

Characteristics Values
Liability insurance Covers injuries and damage to others on the road
Full coverage Liability insurance plus coverage for damage to your vehicle
Liability insurance plus comprehensive and collision coverage
Liability insurance plus damage to your car from collisions and non-collision incidents
Liability insurance plus protection to cover damage to your own vehicle
Liability insurance plus comprehensive and collision coverage, which add coverage for damage to your vehicle
Liability insurance plus collision and comprehensive coverage, which protect your own vehicle against damage
Liability insurance plus comprehensive and collision coverage, which protect your vehicle from collision and non-collision damage
Liability insurance plus comprehensive and collision coverage, which protect your vehicle from collision and non-collision incidents
Liability insurance plus comprehensive and collision coverage, which protect your vehicle

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Liability insurance covers damage to other vehicles or injuries to other people from accidents you cause

Liability insurance is broken down into two parts: bodily injury liability and property damage liability. Bodily injury liability covers the injuries you cause to another party in an at-fault accident, including medical expenses, lost income, legal fees if you're sued, and pain and suffering. Property damage liability covers the costs of repairing or replacing damaged property, such as another vehicle, a fence, or a building.

Liability insurance does not cover injuries to you or your passengers, nor does it cover physical damage to your vehicle, even if you are at fault in the accident. It also doesn't cover damage to your vehicle caused by weather or other incidents like fire. This means that if you only have liability insurance and your vehicle is damaged in an accident, you will be responsible for the repair costs.

The amount of liability insurance you need depends on your state's minimum requirements and your personal financial situation. Most states have a minimum requirement for liability insurance, but this can be inadequate if you cause a large and expensive accident. It's recommended that you purchase enough liability insurance to cover potential costs in the event of a lawsuit. The cost of liability insurance will depend on factors such as your location, driving record, age, and claims history.

In summary, liability insurance is essential for protecting yourself from financial liability in the event of an accident. However, it's important to understand what is covered and what is not covered by your policy. If you want coverage for damage to your own vehicle, you may need to consider adding additional types of insurance, such as collision or comprehensive coverage.

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Full coverage includes liability, comprehensive and collision to keep you protected

Full coverage auto insurance is not a real insurance coverage but a term often used by auto lenders as a requirement before signing a car loan or lease. It includes liability coverage, which is required by law in most states, as well as comprehensive and collision coverage. While liability insurance covers injuries and damage to others when the policyholder is at fault, it does not cover injuries to the policyholder or their passengers, nor does it cover damage to their vehicle. Comprehensive coverage insures the policyholder's vehicle against damage from non-collision incidents such as fire, theft, weather, vandalism, or falling objects. Collision coverage, on the other hand, covers damage to the policyholder's vehicle resulting from a collision with another vehicle or a stationary object.

Full coverage offers more robust protection than liability-only insurance, which only covers injury and damage caused to another vehicle or another person's property. It is generally more costly, with the average annual cost of full coverage in the US being $2,348, compared to $639 for minimum coverage. However, the cost of full coverage varies depending on factors such as the make and model of the vehicle, driving history, age, and location.

While full coverage is not legally required in most states, lenders typically mandate it when a vehicle is financed or leased. Even if a vehicle is owned outright, full coverage may still be a good option for those who want protection against financial risks associated with vehicle damage. It is especially recommended for those with newer vehicles or high-value luxury vehicles, or those who cannot afford to replace or repair their vehicle in the event of an accident or act of nature.

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Full coverage also covers your own vehicle

While liability insurance covers damage to other vehicles or injuries to other people from accidents you cause, full coverage also includes damage to your own vehicle. In other words, full coverage includes liability coverage plus comprehensive and collision coverage.

Comprehensive coverage pays for damage to your car from non-collision sources, such as theft, fire, hail, flood, falling objects, collisions with animals, and vandalism. For instance, if a tree falls on your car, or it’s damaged by hail, or you hit a deer, you can file a comprehensive claim.

Collision coverage, on the other hand, pays for damage to your vehicle from collisions with other vehicles or stationary objects. For example, if you back into a pole, you can file a collision claim.

Lenders may also require other coverages, like roadside assistance, to be included in full coverage. Since full coverage isn't an actual insurance product, talk with your lender and insurer about exactly which coverages are required and right for your needs.

Full coverage is generally more expensive than liability insurance. You should consider whether you can afford the higher premium for full coverage and whether the added protection is worth the cost.

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Liability insurance is required in most states

Liability insurance is a way to demonstrate "financial responsibility", meaning that you can pay if you cause a car accident. It covers property damage and injuries you accidentally cause to others. For instance, if you cause a car accident that results in injuries to someone else, your liability insurance can pay for their medical expenses, up to the limits in your policy. It also covers court judgments, settlements, and legal defence costs if you are sued over a car accident.

Different states have different car insurance requirements, but almost all require drivers to carry liability coverage. The amount of auto insurance you need depends on your overall financial situation, your comfort level for financial risk, and whether your vehicle is financed or leased.

Liability coverage is broken down into two parts:

  • Bodily injury liability: This coverage pays for the injuries you cause to another party in an at-fault accident.
  • Property damage liability: This portion of your liability coverage pays for the damages you cause to another’s property, such as another vehicle, a fence, or a building.

Liability insurance is a good option for those who want to keep their insurance costs down. It is significantly cheaper than full coverage as it provides less financial protection. However, it is important to note that liability insurance will never pay for your own expenses after a car accident, so if you want your own medical bills and repair costs to be covered, you will need to get additional coverage.

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Full coverage is only required if you lease or finance a car

While liability insurance is required in most states, full coverage is only mandatory if you lease or finance a car. This is because full coverage includes liability insurance plus additional protection for your own vehicle, which lenders will require to protect their investment.

Full coverage is also recommended if you can afford it, especially if you have a newer vehicle, can't afford to replace your vehicle if it's destroyed, or have a high-value luxury vehicle. It's also worth considering if you live in an area with poor road conditions or a high crime rate, or if you have a history of at-fault accidents.

However, full coverage is more expensive than liability-only insurance, so if your vehicle isn't particularly valuable, you may want to stick with liability-only coverage. In general, once your car reaches 10 years of age, it may no longer be worth maintaining a full-coverage insurance policy.

Frequently asked questions

Full coverage includes liability insurance and protection for damage to your own vehicle, whereas liability insurance only covers damage to other vehicles or injuries to other people when you're driving.

Liability insurance covers the cost of injuries to others and damage you cause in an accident. It does not cover damage to your own car or injury to yourself.

Full coverage includes liability insurance and protection for damage to your own vehicle. It covers damage to your car from accidents, regardless of fault, and from non-collision incidents such as storms, fires, and theft.

Full coverage is not legally required on a state level but is often required by lenders if you lease or finance your car.

Liability insurance is required in most states.

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