Auto Insurance Full Coverage vs. Liability: What’s Right for You?
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Insurance is available in different forms to accommodate various needs depending on vehicle type, financial risk, and legal requirements. If you’re comparing auto insurance full coverage versus liability, then you should know exactly what’s covered. This article contrasts liability only versus full coverage, the legal and lender requirements, and real-life scenarios to help you decide how much car insurance you need.
Full Coverage vs. Liability: Key Differences Explained
There are several distinctions between liability car insurance versus full coverage. Liability exists to cover others from damages you cause, while full coverage protects both you and your vehicle.
What Liability Insurance Covers
Liability car insurance is typically the minimum coverage required by law, although requirements vary by state. It covers damage you cause to others — such as another driver’s vehicle, property, or person — but it doesn’t cover your own car or injuries.
For example, if you accidentally rear-end someone at a stoplight, liability insurance only covers damages to the other driver. Likewise, if someone rear-ends you at a stoplight, their liability covers you.
What Full Coverage Covers
Full coverage car insurance isn’t a standardized policy. It generally refers to coverage that includes collision and comprehensive car insurance in addition to liability. Collision covers damages to your vehicle in an accident, while comprehensive covers non-collision events such as theft, vandalism, or damage from storms and animals.
Collision and comprehensive are typically shown on your policy with a deductible. Choosing a higher deductible usually lowers your premium, while a lower deductible increases it.
A common full coverage policy might include standard liability limits and additional coverages such as:
- Bodily injury liability: $25,000 per person and $50,000 per accident
- Property damage liability: $25,000
- Comprehensive coverage: $500 deductible
- Collision coverage: $500 deductible
These deductibles are amounts you are required to pay before insurance kicks in. If a tree limb falls on your car, you’d be required to pay for repairs up to your deductible. After meeting it, your comprehensive would cover the rest.
How Much Does Each Type of Coverage Cost?
Full coverage typically costs more than liability-only. The annual national average for liability-only policies is $618 compared to $2,126 for full coverage.
While this may seem like a wide gap, insurers consider several factors when determining your premium, including driving history, vehicle price, and location. Drivers with a clean record and an older car typically pay less than high-risk drivers.
When Full Coverage Is Worth the Extra Cost
Even if full coverage isn’t required, it may be worthwhile if you:
- Drive a high-end vehicle with expensive repairs
- Want to protect against storm damage, theft, or other incidents
- Are comfortable paying a higher premium for more protection
When Liability-Only Might Be Enough
Liability-only is best for people who don’t need a lot of coverage. It may be a good fit for drivers who:
- Own an older vehicle
- Prefer to pay for repairs out of pocket
- Are only interested in meeting legal insurance obligations
Legal and Lender Requirements To Know
Almost every state mandates a minimum liability policy. This ensures other drivers are financially protected if you’re at fault in an accident. You may see these requirements expressed as a ratio, such as 25/50/25. This ratio means $25,000 per person and $50,000 per accident for bodily injury, plus $25,000 for property damage.
Lenders may also require full coverage or additional insurance beyond liability while you’re making payments. If you still owe money on your vehicle, check any insurance requirements before changing your coverage.
Real-Life Scenarios: Which Coverage Fits Your Situation?
Still can’t decide between auto insurance full coverage versus liability? Here are some hypothetical scenarios to help determine which coverage is best:
- You drive a 10-year-old car that’s worth $4,000: Liability-only may be appropriate since full coverage would cost a substantial portion of your car’s value.
- You make payments on a newer vehicle: Even if not required by your lender, full coverage protects you from damage from collisions, theft, and weather. Additional gap insurance may also be appropriate if you owe more than your car’s worth.
- Your budget is tight, and you just want to satisfy your state’s legal requirements. Liability-only insurance is the most affordable option. Still, if your car is expensive to repair or it’s your only vehicle, full coverage may be worth the extra cost.
How Claims Work With Each Type of Coverage
Liability and full coverage protect against different damages, so claims are handled differently.
Liability-only
Because liability doesn’t cover your own vehicle, you won’t file a claim in the traditional sense. Still, you should let your insurer know about an accident immediately to protect yourself legally in case of disagreements later on. While you won’t receive funds, your insurer will likely conduct an investigation and pay the other driver if you’re found to be at fault.
Full coverage
Filing a claim can help cover damages regardless of fault. Keep in mind that claims generally increase your premium unless you have accident forgiveness.
Can You Switch Between Coverage Types?
Most insurance companies allow mid-term policy changes, meaning you don’t need to wait to add or remove coverage options. If you just bought a new vehicle and want more protection, adding full coverage is easy. Upgrading from liability-only to full coverage, or vice versa, is usually as simple as calling your agent or making changes online.
If you change coverage, expect adjustments to your premium — higher for full coverage and lower for liability-only. In the event you switch providers, don’t cancel your current policy until the new one takes effect. This ensures you avoid a lapse in coverage, which may result in penalties and increased rates.
Compare Quotes for the Right Auto Coverage at the Right Price
Thinking of adding additional coverage? Maybe your current rate is too high and you want to explore other options. Your premium is dependent on various factors, including age, location, vehicle type, and driving history. Visit EverQuote, and take a few minutes to compare custom quotes to make an informed decision. Auto insurance full coverage versus liability can be a tricky decision, but it doesn’t have to be.
FAQs
Is it better to have liability or full coverage?
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Premiums are sourced from over 30,000 zip codes across 200 insurance companies. We estimate premiums based on public filings for policies seeking 50/100 in liability with $500 deductibles for collision and comprehensive coverage. Estimated rates are based on a 35-year-old single female with a good credit score and no history of accidents or violations driving a 2023 Toyota RAV4 LE. We partner with Quadrant Information Services to source our data and assume no unique benefits or discounts are applied for these rates (unless otherwise stated). Your own rates may be different.