If you cause a car accident and the other motorist is at fault, liability insurance may assist pay their expenses. However, liability does not cover damage to your car. You’ll need what’s referred to as full-coverage auto insurance to provide that protection.
Unsure about which is superior? Let’s examine liability vs. complete coverage in more detail.
If you cause harm to another person or their property, auto liability insurance can aid with claims for physical or bodily injury.
A policy with full coverage is not insurance. It refers to various coverages or larger quantities, as well as liability, collision, and comprehensive coverage.
Liability insurance is nearly always needed, but full coverage is only necessary in certain situations, such as when you finance or lease a car.
Your risk tolerance, whether you finance your car, how much your automobile is worth, and other factors will all affect how much coverage is best for you.
Car Insurance Differences Between Liability and Full Coverage:
Liability Car Insurance
|Liability Car Insurance
|• Other driver’s bodily injuries
• Other people’s car or property damage you cause
Other driver’s bodily injuries
• Property damage you cause to others
• Damage to your car from collision and non-collision sources
|Meets minimum state-required coverage limits
|May have higher coverage limits for liability coverage; collision and comprehensive limits based on the car’s actual value
|Average Cost (annual)1
|In most states
|Only when you finance or lease a vehicle; some jobs may also require full-coverage car insurance
|A deductible is due when filing a claim on a collision or comprehensive policy claim, ranging from $100 to $2,500; the deductible may be set by your lender.
• You have an auto loan
• Your car is high-value
• You don’t want to pay repair costs out of pocket
• You’re likely to file a claim for damage
• You want extra coverage
Auto Liability Insurance
If you cause an accident that results in property damage or physical harm to others and you are at fault, liability auto insurance is intended to assist defray the expenses.
What Is Included?
Two types of coverage are included in liability insurance:
Coverage for bodily injury liability occurs when you are at fault for an accident that leaves one or more persons with medical expenses, lost wages, legal costs, and pain and suffering.
When you cause an accident that results in expenditures for repairing or replacing damaged property, such as a person’s car or mailbox, you are covered by property damage liability coverage. If you are sued, it may also pay for your defense in court.
3 For each liability coverage category, auto insurance companies set coverage limitations. Bodily harm caps are based on the number of people and accidents involved. You are liable for any additional losses resulting from an accident over and beyond your coverage limitations.
What Is Excluded
Your liability auto insurance policy excludes coverage for:
Costs if you or a passenger in your car are injured
repairing your vehicle after a collision that was your responsibility
Your car being damaged by uninsured or underinsured drivers
Higher than your insurance liability limit claims
The cost of liability auto insurance varies by region, driving history, age, and claims experience. A study from the National Association of Insurance Commissioners (NAIC) that was released in 2023 said that the average liability insurance premium nationally in 2020 was $631, or around $52 per month.
Is it necessary?
In 48 U.S. states, liability auto insurance coverage, or an equivalent, is mandatory, however the minimum amounts and types of coverage may differ.
Two exceptions exist: You are not required to get insurance in New Hampshire, but you do need to be able to demonstrate that you have enough money to fulfill the state’s minimal standards for financial responsibility.
You can choose to drive without liability insurance in Virginia by paying a $500 annual uninsured motor vehicle charge.
Comprehensive Auto Insurance
While there is no official definition of “full-coverage car insurance,” this term typically refers to an auto policy that includes comprehensive and collision coverage in addition to the minimum legal requirements for each state. Full-coverage vehicle insurance occasionally entails larger limits than the minimal legal requirements or other forms of insurance packages.
What Is Included
When you apply for a vehicle loan, your lender probably requires full-coverage auto insurance, but this is not a policy option provided by insurers. Instead, “full coverage” typically refers to the necessity for liability insurance in addition to the following two coverage types:
Collision auto insurance coverage: If you have an accident by yourself, with another car, or with a fixed object like a light pole, collision coverage can help pay for the cost of repairing or replacing your car.
Comprehensive auto insurance: Comprehensive auto insurance assists in defraying expenses associated with vehicle damage due to events other than collisions. Damage from animals, fires, floods, theft, and fallen tree limbs are a few examples.
In most cases, collision and comprehensive insurance work together to help defray the expense of repairing or replacing your car. Full coverage for a customer may also include the following, depending on your state or insurer:
Higher limits for bodily injury and property damage liability coverage than the required by the state
Medical payments insurance (MPI) or personal injury protection (PIP) insurance for accidents involving you or your passengers
Protection for your car against hit-and-runs and drivers with insufficient insurance through uninsured or underinsured motorist (UM/UIM) coverage
Other reporting. Your loan or lease payment and any insurance payout can be offset by the addition of towing, roadside assistance, pet coverage, rental cars, and gap coverage.
What Is Excluded
Ask what is and is not covered by the policy as full-coverage packages differ depending on the issuing business. There isn’t a single, all-inclusive insurance that addresses every conceivable danger or circumstance. For instance, driving your automobile for ride-sharing is an exclusion that may result in a claim being denied according to your policy.
The cost of full-coverage auto insurance varies, much like the cost of liability insurance. The most recent figures from the NAIC show that the average yearly premium throughout the country is $1,176, or $98 per month.
It’s wise to shop around and acquire estimates from a few reliable insurers in order to discover the best bargain.
Is it necessary?
Although it is not required by law, full-coverage auto insurance can be required in the following circumstances:
- Bank or Lender: Until your automobile is paid off, your lender can insist that you maintain collision and comprehensive insurance.
- Leasing company: If you rented a car, you could have to maintain collision and comprehensive insurance up to the end of the lease.
- Employers: Some companies may demand that prospective candidates have comprehensive vehicle insurance.
- If you are obliged to get full-coverage vehicle insurance, find out the specific policy types, deductibles, and dollar amounts needed. You could also be required to have a deductible that is less than a certain threshold, like $1,000 or $2,500.
Risks and Tolerance for Risk
It’s more crucial to get a selection of coverage when your danger of collision is larger. Think about the hazards you face when:
History of accidents and claims
Regular routes for driving
Rxposure to theft risk
Animals, falling limbs from trees, floods, or flames are examples of non-collision causes.
Would you rather take the chance and pay less up front with liability insurance or would you rather be safe than sorry with comprehensive coverage? Keep such coverage in place if you’ve previously had to submit complete claims.
Liability automobile insurance is more expensive than full coverage, according to auto insurers. For complete coverage, you’ll spend more each month—on average, roughly twice as much. However, you’ll acquire better defense against unforeseen auto damage. More costly automobiles, cars that are frequently stolen, and cars that are more expensive to fix will typically result in higher full-coverage premiums.
Your restrictions on responsibility are up to you. You might boost your liability limits for a full-coverage auto insurance policy to a larger sum. However, the limits for comprehensive and collision coverage are set by the car’s real value; you cannot change the limit.
Another element is the worth of your automobile. If your car was totaled, consider if the payout would be worth the insurance expenses. Which option would you choose if your automobile was damaged: replacing it without an insurance payout or paying out of pocket for repairs? For newer, more expensive automobiles, full coverage is frequently more beneficial.
The Verdict In most cases, liability auto insurance is a must. It usually comes with legal requirements, is reasonably priced, and aids in accident protection for both you and other people. On the other hand, comprehensive coverage might not always be required.
If you own your car outright and you rarely drive or haven’t had a claim in many years, it can make sense to forego comprehensive coverage. It might also make sense if you don’t require other forms of coverage, are okay paying for essential repairs out of pocket, or if the value of your car doesn’t make the coverage prices worthwhile.