Understanding the difference between liability only and fully covered auto insurance will help you choose the right policy and avoid surprises in case of a car accident. The main differences are as follows:
If you cause an accident, liability car insurance will pay for other people’s medical expenses and property damage.
Full coverage is an upgraded auto insurance policy that is paid in more cases. The term "full coverage" is generally applicable to policies with liability, collision and comprehensive insurance.
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Liability car insurance is required in most states. Liability insurance pays to others and their property harm and damage until your policy limits. Suppose you drive another car to another car, and the crash will damage the bumper of both cars, thus whipping the other drivers. Your liability insurance pays for vehicle repairs for other drivers and depends on the state's medical expenses.
However, your liability insurance will not cause damage to your vehicle. To do this, you need collision insurance.
Liability-only car insurance policies are not paid:
Damage to a vehicle, crash driver or uninsured driver due to an accident
You or your passenger in an accident are injured, crash driver or uninsured driver
Theft of a car
Damage your car due to hail, natural disasters, fire, falling trees, vandalism and other issues
Fully covered auto insurance policies provide extensive coverage for other bills you are responsible for and bills that damage your own vehicle.
Liability Insurance Pay for injuries and property damage caused by you unexpectedly.
Comprehensive insurance In addition to incidents other than collisions, you also have to pay for repairing the vehicle. Examples include theft, vandalism and hitting animals. Comprehensive insurance has deductible amounts, which is the amount deducted from the insurance claim check.
Collision insurance The accident occurs after another vehicle or object (such as a mailbox) and the cost of repairing the vehicle is required. Crash insurance is available whether you cause an accident or not. For example, if someone hits your vehicle, you can file a claim for their auto insurance or use your own collision insurance. Usually, you can use collision insurance after a crash or accidents caused by an uninsured driver. Collision insurance can also be deducted.
Fully insurance auto insurance will not cover medical expenses for you and your passengers after the accident.
Roadside assistance and car rental are not considered part of full coverage, but can be used as other coverage.
Liability insurance is always cheaper than full coverage because it covers much less. With a liability-only policy, your insurance company only needs to pay you for damages caused to other accidents. The Liability Policy only does not pay claims for your car repairs, including claims involving weather losses or theft.
Your decision on whether to purchase a comprehensive insurance vs. a liability-only policy will depend on how much financial risk you want to assume. With a Code Accountability Policy, you can hook if your vehicle is damaged or stolen.
The other four types of auto insurance that expands protection are uninsured driver insurance, personal injury protection (PIP) or MEDPAY, rental compensation and clearance insurance.
If your car is hit by an uninsured driver, the insurance of the uninsured driver pays for you and your passengers. In some cases, it can also pay for damage to your vehicle. Some states require uninsured motor coverage.
Personal injury protection or PIP and MEDPAY are two types of auto insurance coverage that pays you and your passengers medical expenses after an accident, regardless of what happens.
PIP covers medical expenses and other expenses such as funeral expenses, lost wages and alternative expenses for duties that cannot be performed due to accidents, such as child care fees.
Medpay pays for car accident medical expenses that are not covered by your primary health insurance, regardless of the drawbacks.
Some states require PIP or MEDPAY. No country needs both.
Rent repayment insurance helps pay for rental car or public transportation when your vehicle is repaired after an accident. You cannot add rent repayment coverage to a liability-only policy. You can add it to the full coverage policy.
If your insurance company believes your car is total loss and you owe a car loan or lease, gap insurance can be useful. In total losses, the insurance company will not pay for repairing your car, but will pay for the value of your car. If you get more car loans or leases than you get from your total loss expenses, GAP insurance covers the difference. You need a comprehensive coverage strategy to add gap insurance.
Full coverage includes liability, comprehensive and collision insurance. If you are at fault in an accident, you may need liability and collision coverage to cover the loss. Liability insurance pays for other people's medical expenses and repairs damaged property from others (including other vehicles). Collision insurance covers repairs for your own vehicle.
No, liability insurance does not include repairs to your own vehicle. If someone hits you, the driver's car insurance should cost your vehicle repair. This may not happen if other drivers do not have insurance or leave the accident without sharing contact information. In this case, you need collision insurance to help pay for damage to the car.
If you own your car completely and have little value, you may not need to cover your car insurance in full. The highest expense in a collision or comprehensive claim is the actual cash value of your vehicle, and if it is totaled or stolen, a car with a small value will only result in small claims payments.
If your car is not financed, you can switch from full coverage to liability-only insurance. To make changes, call your insurance company and ask for a reduction in coverage.
Amy Danise and Tim Manni edited this article.