All car owners know that insurance is a must if they want protection for their car. However, when being new in the process, it can be challenging to choose between liability insurance vs full coverage. That’s why we’ll go over the main differences of each. That way, you can know which is the best policy for you.
Learn the Main Differences Between Liability Insurance vs Full Coverage
If you own a car, then you’ve probably thought of getting insured as well. In fact, most states even have minimum coverage requirements for owning a car. For this reason, it’s always a good idea to count on auto car insurance.
Unfortunately, as we all know, getting your car insured isn’t your typical walk in the park. With so many options, it’s common to get confused and not know which is the right policy for your needs, especially if it’s your first time with an insurance company.
When it comes to auto policies, there are two main types of coverages to keep in mind: full coverage and liability insurance. For this reason, we’ll go over each, defining their main differences.
What is Full Coverage Car Insurance ?
Full coverage insurance consists of three main types of protection: no-fault liability, collision insurance, and comprehensive insurance.
Collision insurance grants coverage to car owners for any damage caused by a collision with another vehicle. This protection applies when the collision occurs while you’re driving.
Comprehensive insurance, on the other hand, covers your vehicle whenever you’re not using it. This includes natural disasters, accidents, and theft.
Along with collision and comprehensive coverage, full coverage insurance includes rental car reimbursement protection and emergency roadside assistance as well.
And, of course, if you want extra coverage, you can also go for additional options. These options can be personal injury protection, gap insurance, rental reimbursement, and uninsured motorist protection.
Unlike liability insurance, a full coverage policy is optional for all states. However, this insurance is the most valuable between the two.
What is Liability Insurance ?
We then have liability insurance. This policy, also known as liability-only coverage, is the one that’s a legal requirement for most states if you own a car. These insurances include liability for property damage and bodily injury liability.
Property damage liability covers any damages done to someone else’s property or vehicle while using your car. Bodily injury liability, on the other hand, covers medical expenses in case someone got injured in an accident by you.
Depending on your state, you’ll count on different minimums of liability insurance. However, keep in mind that these state minimums are usually to grant protection if you have few financial assets. In case you own a home or have savings, then you’ll want to count on extra protection, such as a full coverage policy.
The reason behind this is because liability insurance can only cover you whenever you’re at fault. There are multiple scenarios in which your car might be in danger. Some of these instances include weather damage, theft, and any accident that can cause damages done to your vehicle, yourself, or your passenger.
Costs Between Liability vs Full Coverage Insurance
Of course, when comparing costs between liability insurance vs full coverage, it’s only natural to expect that full coverage has a higher premium. However, as we stated before, full coverage grants you protection for many more dangers.
Picture yourself the following: you get involved in a car accident in which damages extend to other vehicles and even buildings. In the worst-case scenario, you may end up paying for any lost wages along with medical expenses.
As a result, paying for damages can end up costing you thousands of dollars when having only liability insurance. This can ultimately hurt your savings.
On the other hand, when you rely on a full coverage policy for your car, you won’t need to worry about these expenses. You can be sure that your insurance company will handle them without a problem.
In other words, you can say that having full coverage helps you in the long run, despite the higher premium. However, some instances can be better for you if you count on liability-only coverage. We’ll go over these instances on our next point.
Should You Drop Full Coverage Insurance Eventually?
This is a common question for car owners. After all, why would anyone provide full coverage to an old car? For this reason, it’s essential to keep a couple of things in mind when it comes to dropping your full coverage insurance.
First of all, you must take into consideration your vehicle’s age. In most cases, when a car is eight years or older, you’ll need to start taking into consideration the comprehensive and collision cost. In case this cost exceeds 10% of your car’s value, then you should count on liability-only insurance.
Although this is true in most cases, you’ll also want to take into consideration exceptions. That’s why another thing to take into consideration is your car’s value. For instance, if there’s no way you can financially cover your car’s loss, then it’s best to keep the full coverage insurance.
In case you decided to opt for liability insurance, remember to save the money you would be spending on full coverage. That way, you can count on that money in case something dreadful were to happen or use to either repair or replace your car.
So, Which Is Better Between These Two Policies?
Now that you know the coverage between the two, it’s time for you to decide which protection is best for you.
When comparing liability insurance vs full coverage, remember that most states legally require liability insurance if you own a car. Additionally, it only protects the damages caused by you. However, full coverage grants protection to your vehicle at all times, no matter if it’s in use or not.
Lastly, remember to count on a quality insurance company for your auto insurance process. Be sure to talk with your insurance agent about the coverage between these two policies and choose the one that best fits your needs.