Full Coverage Vs. Liability Automobile Insurance: What’s Best? – Our ratings and reviews are not influenced by our advertising relationships, but we may earn a commission from our affiliate links. This content is independently created by its editorial team. Learn more.
An auto liability insurance policy generally represents the minimum coverage needed to hold you financially responsible if you cause an accident that injures others or damages their vehicle. Comprehensive coverage adds financial protection to your vehicle if it is stolen or damaged.
Full Coverage Vs. Liability Automobile Insurance: What’s Best?
In most states, liability coverage is required by law—you need it to drive legally. Full coverage is optional but worth considering if you have a newer or high value vehicle. A lender may require full coverage if you finance your car with a loan or lease.
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An auto insurance policy is a contract between you and an insurance company such as Liberty Mutual, State Farm or Progressive. This contract consists of one or more types of coverage. Each coverage specifies certain conditions under which the insurance company will reimburse you or another party to help pay for car repairs, medical bills or other expenses.
Liability refers only to the policy that includes only two coverages – bodily injury and property damage. Both of these coverages only apply if you are found to be “at fault” for the accident.
Bodily Injury Liability (BI) coverage pays the medical bills and related expenses for the driver and other passengers. It doesn’t pay your medical bills.
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Property Damage Liability (PD) coverage pays the cost of repairing or replacing the other driver’s vehicle. It does not pay your repair costs.
Most US states require your policy to have both BI and PD liability coverage. They ensure that you are financially responsible to others for any damage or injury you may cause.
And note that if you are involved in an accident where another driver is found to be at fault, their liability coverage should ensure that your medical and vehicle repair bills are paid.
Infographic: Types Of Auto Coverage
Comprehensive coverage refers to a policy that includes both BI and PD liability and two additional coverages—collision and comprehensive—that help pay for damage to your vehicle.
Collision coverage reimburses you for the cost of repairing or replacing your vehicle if it is damaged in an accident in which you are found to be at fault.
Comprehensive coverage reimburses you for the cost of repairing or replacing your vehicle if it is stolen or damaged by a falling tree branch, hail, flood, fire or other act of nature.
Take A Look At Your Car Insurance
Collision and comprehensive are not required by law. However, if you finance your car with a loan or lease, the lender may require you to have these coverages on your auto insurance policy. Be sure to check with your insurance company or agent to make sure you have the coverage you need to stay legal and meet the requirements of the loan or lease.
When you buy a car insurance policy, you need to choose limits for your liability coverages. The limit is the maximum amount of money the insurance company will pay for a claim. You will be responsible for any costs above your limit. So, for example, if your BI limit is $50,000 and you are responsible for an accident where the other driver has medical bills of $60,000, you will be responsible for the difference of $10,000.
Choosing a higher limit means you have more coverage. But it also means you’ll pay more for the policy.
Liability Vs Full Coverage Car Insurance
If your policy includes collision and comprehensive, you should choose discounts. The deductible for each of these coverages is the amount of money you will have to pay if you have a claim. For example, if you have a $1,000 collision deductible and the cost to repair your car is $5,000, your insurer will pay the repair shop $4,000. You will be responsible for the last $1,000.
Choosing a low deductible means you have less to pay out of pocket if you have a claim, but you’ll pay more for your policy.
Other covers are usually available and can be added to your policy to increase your protection. They can include:
Average Cost Of Car Insurance (2023)
Personal Injury Protection (PIP) pays your medical bills related to injuries sustained in an accident, regardless of who is at fault for that accident. Some states now require drivers to have PIP. Available as an option in others.
Uninsured/Underinsured Motorist (UM/UIM) coverage helps pay your medical or vehicle repair bills if you are involved in an accident caused by another driver who is uninsured or whose liability limits are insufficient to pay your bills.
Similar to health insurance, medical payments or medpay, the cover helps you pay your medical bills if you are injured in an accident.
Georgia’s Auto Insurance Policy Requirements
Available to drivers with collision or comprehensive coverage, rental reimbursement helps pay the cost of a rental car if your car is in the shop for repairs covered by your policy.
Because a full coverage car insurance policy provides more protection than a liability-only policy, you can expect it to cost more. In fact, a comprehensive coverage policy costs almost twice as much on average as a liability-only policy.
According to the National Association of Insurance Commissioners (NAIC), the national average annual premium (cost) for liability only is $631. The average premium for full coverage is $1,176.18.
Liability Vs. Full Coverage Car Insurance: What’s The Difference?
Many insurance experts advise shopping around to find the lowest auto insurance premium. We see why here: There’s a $195 difference between the cheapest and most expensive insurers for a liability-only policy, and a $309 difference between the cheapest and most expensive insurers for comprehensive coverage.
We have collected data from many sources. State and national average premium data comes from the National Association of Insurance Commissioners (NAIC) 2019/2020 Auto Insurance Database Report, published in January 2023. The NAIC compiles state-by-state average premium data for liability, collision and comprehensive coverages. Insurance premium data is sourced from the Moneygeek review (accessed August 8, 2023).
This information is provided for comparison purposes only, to help our readers get a general idea of the cost of car insurance. Your costs may vary significantly from what is shown here.
Liability Car Insurance: What Does It Cover?
Almost every state requires minimum levels of liability coverage, and a liability-only policy is sufficient for many drivers. Other drivers, especially those financing their vehicle with a loan or lease, should take out a full coverage policy, including collision and comprehensive coverages.
Comprehensive coverage is not the same as comprehensive insurance. In contrast, comprehensive is part of a full coverage policy.
Comprehensive refers to specific coverage available as part of an auto insurance policy. Covers theft or damage to your vehicle from events other than a collision with another vehicle (examples include falling tree branches, hail, flood or fire).
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If your car has been totaled in an accident caused by another driver, your liability coverage should help pay for its replacement. It doesn’t matter if your policy is liability only or not.
If the accident is your fault, your car is damaged by an act of nature such as bad weather or fire, or it’s stolen, your liability policy alone will unfortunately not help you. Your insurance company is only required to pay claims based on the coverages you have selected for your policy. Therefore, you will have to pay out of pocket to repair or replace your car.
If the cost to repair your car is more than the cost to replace it, you may be able to sell the car to a salvage yard to recoup some of the cost.
Liability Only Auto Insurance
Your car insurance premium is based in part on the types of coverage in your policy and the coverage amounts. Adding optional coverages, increasing your coverage limits and reducing your deductible will increase the cost of your auto insurance policy.
The best car insurance company provides the coverage you need and options to customize your policy. And he should provide policies at prices that fit your budget.
You can see trusted independent reviews, such as those from J.D. Power ratings and financial strength by A.M. Better to help you narrow down your options. An independent insurance agent can also recommend companies based on your needs.
Is My Car Too Old For Full Coverage?
To find out if you have full cover, see the policy statement page. This policy summary must be provided when purchasing a policy. It may also be available online on your insurer’s website or app.
Your policy is considered “full coverage” if you have liability, comprehensive and collision coverage. Contact your insurance company or agent if you are unsure or have any questions.
The information presented here was created independently by the editorial team. For more information, see the About page. Partner Content: This content was created by a Dow Jones business partner and was independently researched and written by the newsroom. The links in this article may earn us a commission. Learn more
What Is The Difference Between Liability Vs. Full Coverage?
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By: Daniel Robinson, By: Daniel Robinson Author Daniel is a staff writer and reporter for many automotive news sites and marketing companies in the US, UK and Australia, specializing in car financing and car care. Daniel is a drivers group authority for car insurance, loans, warranty options, services car and more.
Editor: Rishon Mitchener, Editor: Rishon Mitchener
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