Liability vs. Full Coverage: Comparing Car Insurance Coverages
When considering liability vs full coverage you first must understand what each coverage offers. In instances of property damage liability and personal injury liability, the state minimum will take care of the other driver and his/her passengers if you're at fault. The difference between liability and full coverage is big if you want coverage for damages to your car or to take care of your passengers' injuries.
What Does Full Coverage Auto Insurance Include?
Full coverage car insurance includes comprehensive and collision insurance, possibly personal injury protection (PIP) and Uninsured Motorist/Underinsurance Motorist coverage (UM/UMPD), if they are required in your state. These types of coverage would cover you, your vehicle and passengers if you had an accident, regardless of who is fault.
Again, when you have to decide between liability vs full coverage consider what bills you may have in terms of injury coverage for your passengers and the damages to your car if an accident is your fault. If you can't find an insurance company to offer an affordable policy for your vehicle or vehicles, SmartFinancial can find you the right car insurance coverage at no cost. Just begin by entering your zip code on this page.
Now, let's look at coverage options so you can determine what coverages you need. Liability insurance coverage alone may not be enough.
Are You Still Making Payments on a Car?
If you are leasing or financing a vehicle, you probably are required to carry full coverage. Some people even carry umbrella insurance to make sure they are protected against financial setbacks in case their liability limits do not cover an expensive accident.
It's important to have adequate but fairly priced insurance. You should compare auto insurance quotes to compare rates, which fluctuate all the time. Your personal rating may change if your credit score goes up or down or if you move. If you have an accident or your record is cleared of an at-fault offense, your rate will change too.
If You Own Your Car But Want Peace of Mind
Full coverage car insurance is a great way to ease your mind about protection for your family. With comprehensive and collision coverages, your car is covered for things like weather and theft and vandalism in addition to repairs for your car if you should be in an accident.
Full coverage car insurance also includes the liability standards set for the drivers in your state. And it may even include other state-required insurance coverages such as uninsured motorist coverage and underinsured motorist coverage and personal injury protection (PIP) coverage. That's a full menu of auto insurance coverage and that's why it is called full coverage car insurance.
Full Coverage Covers More Situations
What Collision Coverage Offers
Between comprehensive and collision coverages you are covered for an extensive array of accidents and unfortunate events. Collision insurance helps to repair your car if it is damaged in an accident with another car or object such as a tree, fence or guardrail. The collision also pays for damages to your car if you are a victim of a hit-and-run accident.
What Comprehensive Coverage Offers
Comprehensive insurance covers fire, theft, vandalism and damages from weather such as a windstorm, a hailstorm, a hurricane and a tornado. Those are a lot of events and scenarios that are covered by full coverage auto insurance.
What Liability Coverage offers
Don't forget about liability coverage. If you ever cause a car crash, liability insurance pays for other people's injuries and property damage up to your liability limit. Liability insurance also pays for your legal defense if you're sued for an accident. Liability coverage is included in full coverage auto insurance as well.
Make sure you have high enough limits on your liability coverage because car accidents can be expensive, especially if a car has all the new safety features, like cameras and sensors.
Full Coverage Auto Insurance Is More Expensive But May Save You Money in the Long-Run
There is a lot included in full coverage car insurance. You've got collision coverage, comprehensive coverage, the liability coverage required by your state and any other state-required car insurance coverages. They all cost money and that is why the cost of full coverage auto insurance can really add up.
On the flipside, it may cost you much more if you're in an accident without full coverage auto insurance. Repairs are expensive, especially on newer cars. It may cost you thousands of dollars out-of-pocket versus hundreds per year in insurance.
Read more to see what we mean.
Who Needs Liability vs Full Coverage Insurance?
If you have a car worth less than $3000 or $4000 you may be better off saving money for repairs in case you cause an accident and your car needs fixing. However, if you have a new car or a very expensive car, you'll want to invest in full coverage auto insurance. Your car will be protected in an accident and in other scenarios including theft and vandalism. You'll also want to be covered for repairs if you're at fault for an accident. Liability coverage only pays the other guy.
Insurance Requirements for Leasing and Financing a Car
If you are financing your car, your lender may require that you carry collision and comprehensive insurance coverages. These two types of insurance in addition to liability insurance give you full coverage auto insurance.
Other Reasons Full Coverage Makes Sense
If you don't have adequate savings to pay to repair your car if it is damaged, you need the protection of full coverage car insurance. This one is about peace of mind and practicality. If you can't afford to fix a car on your own, better invest in some insurance that covers car repairs from accidents and damages.
If you live somewhere there is a high rate of auto theft, it is a good idea to protect your car from auto theft with full coverage. Comprehensive car insurance, included with full coverage car insurance, covers both theft and vandalism.
Lower the Cost of Full Coverage Insurance With Higher Deductibles
A deductible is the amount you need to pay before your auto company begins to pay for damages to your car or losses. Both collision insurance and comprehensive insurance require deductibles. Choosing a higher deductible will help to lower your auto insurance premium and make that full coverage car insurance much less expensive. So rather than opting for a $500 deductible, choose a $1,000 deductible and you'll save money on your full coverage. Just make sure to have an emergency fund to cover that $1,000!
How Much Does Full Coverage Insurance Cost?
The average full coverage car insurance policy costs about $1,134 per year, according to the National Association of Insurance Commissioners (NAIC). To lower the cost further, considering boosting your deductibles.
The average cost for collision coverage is $363 per year and the average cost for comprehensive insurance is $160 per year, according to the NAIC. Nearly four out of five drivers purchase collision and comprehensive coverages for their vehicles, according to the Insurance Information Institute.
Other Insurance Coverages Included in Full Coverage Insurance
Any state-mandated insurance coverage is going to be included in a full coverage car insurance policy. These policies include uninsured motorist coverage and underinsurance motorist coverage and personal injury protection (PIP).
Uninsured/Underinsured Motorist Coverage
Uninsured motorist coverage helps pay for damages caused by a driver who doesn't have insurance. Underinsured motorist coverage protects you in the event of an accident where the other party is at fault and doesn't carry enough insurance. Many states require drivers to carry uninsured and underinsured motorist coverages.
Personal Injury Protection
Personal injury protection also is known as no-fault insurance. This coverage pays the cost of lost wages and medical bills up to the policy's limit. No-fault insurance will pay these expenses regardless of who is responsible for the accident. Some states require drivers to carry personal injury protection insurance.
Is Gap Insurance Included in Full Coverage?
Usually, gap insurance is bought separately and is only available for newer cars. It's important coverage to have if your car's value is less than what you owe on it.
A Tip on Shopping for Full Coverage Auto Insurance
To get the best price on full coverage car insurance you'll need to shop around and compare the prices of several different insurance providers. You'll want to look at the offerings of the biggest insurance companies but you'll also want to check out what's available from small, regional insurance providers. Doing so could save you hundreds of dollars a year on your full coverage car insurance.
Need a hand with all this shopping around? That is where SmartFinancial comes in. With SmartFinancial's help, you'll be comparing insurance quotes from insurance companies in your area in no time. And because SmartFinancial has access to more than 200 insurance companies you're bound to find full coverage car insurance at the low price that you want.
Fran Majidi manages content on SmartFinancial's website. She's had nearly a decade's worth of experience writing about insurance-related topics. Prior, she was an arts and entertainment editor in New York City. She has a B.A. from Barnard College and an M.F.A. in writing from The New School. She writes books under her given name, Afarin Majidi.
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