What is the Difference Between Liability and Full-Coverage Auto Insurance?
While drivers in the U.S. are required by law to have car insurance, not everyone knows exactly what is covered by their insurance policy. Your car insurance policy can be classified as either liability only or full coverage. Here is an explanation of the differences between these two types of car insurance to help you determine if you have the right coverage for your needs.
Liability Protects Others' Property
Liability insurance coverage is usually the minimum that is required by law. If you are found to be at fault for a collision with someone else's vehicle or property, liability insurances covers the other party's damages. Liability insurance is essential coverage to protect you from having to pay for the damages out-of-pocket.
Depending on the policy that you have, your liability insurance may also cover the other driver's medical bills if they are injured during the accident. You should study your policy carefully to determine the maximum liability coverage for property damage, medical coverage limit per person involved in an accident, and the maximum medical coverage limit for all persons involved in an accident.
Full-Coverage Insurance Protects Your Own Property
While liability coverage protects you from having to pay for another driver's damages, full-coverage insurance includes liability coverage and also goes a step further by helping you recoup some of your own expenses. The most basic part of full-coverage insurance is the amount that it will pay for property damage to your own vehicle.
When purchasing a full-coverage auto insurance policy, the first number that many drivers will look at is the deductible. The deductible is the amount that the driver is required to pay out of pocket before their insurance will begin to cover their damages. While a high deductible can make it more difficult to receive an insurance payout in the event of an accident, it can also reduce the amount that you pay monthly for your full-coverage insurance.
Theft, Vandalism, and Accidents
Full-coverage auto insurance will pay for several types of damage that drivers may incorrectly think they are already insured for. Examples include damages from fire, hail, and water damage from extreme weather as well as unpredictable accidents such as a tree falling on your vehicle.
If you live in a neighborhood with a high rate of vehicle theft and do not have a garage to store your vehicle in, you should consider full-coverage auto insurance to be a necessity. Full-coverage insurance will pay for damage to your vehicle caused by vandalism and attempted break-ins, as well as some or all of the cost of replacing your vehicle if it is stolen.
Medical Bills and Additional Features
Just as liability insurance will sometimes cover the medical bills of other drivers involved in an accident, full-coverage insurance can help to pay for your own medical bills. These include the cost of your hospital stay, surgeries, rehabilitation, and prescribed medications.
While medical coverage typically comes standard with full-coverage auto insurance, there are a number of other types of coverage that you can opt into for an additional fee. For example, some insurers will pay your towing fees if your car ever breaks down if you opt into that additional coverage.
It is an unfortunate fact that not all drivers on the road adhere to the laws about minimum insurance requirements. Many insurers allow you to opt in to coverage for damages caused by uninsured or underinsured drivers to minimize the amount you pay out of pocket for damages that aren't covered by another driver's insurance.
As this comparison shows, choosing the minimum auto insurance required by law isn't always the best option. Keep the differences between liability and full-coverage insurance in mind when purchasing auto insurance so you can find the insurance policy that will best protect your vehicle. Consider contacting local insurance providers, such as Northeast Insurance Agency, to learn more about their policies so you can choose the plan that's best for you.
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