Liability vs. Full Coverage Car Insurance: Which Is Better – As a new or old driver, when you are looking around for a car insurance policy, you will definitely come across words like “liability” and “full coverage car insurance”. Although you may have heard these terms before, you may not know the exact differences between them.
Don’t worry, you are not alone. A lot of drivers find shopping for car insurance confusing and full of different terms. In this article, we will explain Liability vs. Full coverage car insurance. And tell you what you need to know to decide which policy has the coverage types that fit your needs and budget.
What is Liability Car Insurance?
This policy helps to pay for injuries and property damage that you are responsible for. For instance, if you accidentally cause an accidents that results to someone else injuries or property damage. Your liability coverage can pay for their medical bills up to the limits in your policy. Also, the policy can cover legal expenses if you get sued over the car accident you are responsible for.
The property damage portion of your coverage will cover repair costs, up to the policy’s specified limits. Your state may have a minimum requirement for this insurance. However, the state minim might not be enough, especially if you cause a huge and costly accident. It is advisable that you purchase adequate liability-only auto insurance to cover you in case of a lawsuit.
What is Full Coverage Car Insurance?
The term “full coverage car insurance” doesn’t refer to a single type of policy. Rather, it describes a policy that combines liability, collision, and comprehensive coverage. While liability insurance is required in many states, collision and comprehensive coverage are typically optional. However, if you’re financing or leasing your vehicle, your lender or the leasing company will likely require you to have both.
Collision and comprehensive insurance are separate types of coverage, but they’re often sold together by insurers. Each one includes a deductible—this is the amount deducted from your claim payout. The maximum your policy will cover is the vehicle’s actual cash value, or what it was worth before being declared a total loss, minus the deductible.
- Collision insurance: This helps to pay to replace or repair your vehicle. Even though it is you or another person who causes the accident. For instance, if you run into a policy, you can file a claim for this coverage. However, it does not cover the damage to a third party’s car. The liability insurance will help cover that.
- Comprehensive insurance: this coverage will pay to replace or repair your vehicle for issues. Such as fire, hail, falling objects, animal, theft or vandalism. For example; if an object fall on your vehicle or you hit a dear or the vehicle gets damaged by hail, you can file for a claim for this coverage.
Is Liability Car Insurance a better option?
This coverage is a good way to display your financial responsibility. This means you don’t need to worry much for expenses if you cause a car accident. In most states in the United States except from Virginia and New Hampshire. You are required to have a minimum of liability insurance. Even those states may have liability requirements under some situations. For instance, in New Hampshire you are required to purchase this coverage under the below conditions;
- You were convicted for driving under the influence or intoxicated and must file an insurance proof for a minimum of 3 years.
- You are responsible for a car accident and you do not have coverage and you are now required to file for insurance proof
- The individual must make an appearance at an administrative hearing for some offenses. And purchasing auto policy is the condition for getting back or retaining the license
- Your license was taken because of an habitual offense but you must show a proof of insurance before getting it back.
In New Hampshire, drivers who choose not to carry liability insurance must demonstrate that they have sufficient funds to cover any damages they may cause in an accident. Failing to do so can result in losing the right to drive in the state. This is why many residents opt to purchase liability coverage, even though it isn’t legally required.
In Virginia, drivers can forgo liability insurance by paying a $500 annual fee to the state. However, if they cause an accident, they are personally responsible for covering all resulting damages and injuries out of pocket.
How much does Liability insurance Cost
According to the National Association of Insurance Commissioners, the average annual cost of liability insurance coverage is approximately $650.
However, the cost may vary depending on various factors. These factors includes; your driving history, vehicle model, location, age, the amount of coverage you want to purchase, your insurance claims history, your gender, occupation, credit and marital status.
Is Full coverage a better option?
If you lease or finance a vehicle, your lender or the leasing company may required to have a full coverage auto policy. Comprehensive and collision will protect their interest in case the vehicle is stolen or get totaled. Dropping the collision and comprehensive coverage from your leased or financed can void the loan or lease terms.
Even if the vehicle is your own, it is advisable to go for full coverage car policy if you want to cover problems such as hail damage, car theft and other various problems. Without the collision and comprehensive insurance in your policy. You may have to pay if your car is damaged or destroyed by any of these problems out of your pocket.
How Much Does Full Coverage Car insurance cost?
According to the National Association of Insurance Commissioners, the average cost for a full coverage auto policy is up to $1,204 annually. Keep in mind that the liability portion of the policy is always the most expensive part.
The national average annual premium for liability is $650, collision is $381 and comprehensive is $174. However, the cost of the policy may vary depending on several factors. Such as your driving history, location, the amount of the coverage you want to buy and many more.
Liability vs. Full Coverage Car Insurance: Which is better?
Liability vs. Full Coverage Car Insurance: Which Is Better – While liability covers damages you cause to others while driving, Full coverage includes the liability coverage along with other coverages to protect you, your passengers and your car on the road.
If you want to just meet the minimum amount of car insurance requirement in your state, Liability insurance is the better option. But if you want a coverage that protect you and your car in case of in accident regardless of who is at fault. Then, you should opt for the Full Coverage car insurance.
When want to put together your policy, you can add in extra coverage types to help fill in the gaps you may pay out of pocket. Some of the additional coverage types to consider include; Uninsured motorist coverage, gap insurance. Also, rental reimbursement insurance, roadside assistance, medical payments coverage and personal injury protection.
