Liability vs. Full Coverage Car Insurance

Liability and full coverage represent varying car insurance coverage levels that correspond to different monthly or annual premiums. The table below demonstrates the main differences between these two car insurance coverage levels: 

It’s important to note that you can adjust your car insurance coverage levels at any point, just like you can pause your car insurance if you’re not driving. If you want to up your car insurance levels or add full coverage to your policy, call your insurance carrier directly or log into your online or mobile account. From there, you should be able to select the coverage levels that fit your needs. 

Most states require all drivers to carry liability car insurance coverage, which consists of two separate categories:

• Bodily injury: This coverage pays for expenses incurred by medical bills, pain and suffering, and lost wages. 
• Property damage: In addition to repairing buildings or fences or additional damaged property, this coverage also pays for vehicle repairs.

When listed, liability coverage typically manifests as a grouping of three numbers: 

Bodily injury per person/Bodily injury per accident/Property damage 

In practice, this may look like 15/25/10, corresponding to $15,000 per person of bodily injury coverage, $25,000 of bodily injury coverage per accident, and $10,000 in property damage. Liability coverage of 100/300/100 is typically one of the highest limits for this type of car insurance. Higher limits will provide you additional coverage in an accident, but it comes at a price that reflects in your premium. 

However, adding high limits to your liability-only coverage can help protect your assets. If you are found at fault in an accident and don’t have enough coverage to foot the bill, your assets could be at risk. Choosing your car insurance coverage wisely is essential for this very reason. 

What’s covered by liability

Liability covers: 

• The other driver’s medical bills and lost wages
• Pain and suffering as experienced by the other driver
• Any property damage as a result of the accident

Most liability-only insurance policies waive the requirement for a deductible. 

What’s not covered by liability

However, liability does not cover: 

• Your and your passengers’ medical bills and lost wages
• Repairs to your vehicle 
• Claims higher than your coverage limits
• Uninsured or underinsured motorists 
• Accidents that aren’t your fault 
• “Acts of God” or other natural events 
• Hitting an animal, such as a deer

Your liability coverage kicks in if you’re found at fault for an accident, but the other party’s kicks in if they’re determined to be at fault. If you and your passengers were involved in an accident that was someone else’s fault, their insurance pays for your medical bills, pain and suffering, and lost wages. 

Full coverage car insurance combines facets of various types of policies into one. In addition to liability, full coverage often includes comprehensive, collision, and any manner of additional coverages, such as those listed below: 

• Comprehensive: This particular coverage deals with damage caused by theft, vandalism, natural disasters, and animals. 
• Collision: As the term suggests, this type of coverage kicks in after an accident with another vehicle or road hazards. 
• Medical coverage (MedPay): Drivers intentionally add this coverage to offset the medical expenses and lost wages accrued after an accident. 
• Personal Injury Protection (PIP): Similar to MedPay, PIP pays for medical bill coverage for drivers and their passengers. 
• Uninsured/Underinsured Motorist (UM/UIM): When the at-fault driver’s insurance is lacking, this coverage assists in covering medical costs and property damage. 
• Rental car coverage: This coverage comes in handy when your car is in the shop due to a covered claim. 
• Guaranteed Asset Protection (GAP): Many borrowers purchase GAP to cover the remainder of their payments should their car be totaled before they’ve paid it off. It helps drivers stay out of the red and in the black should an accident occur.

Obtaining a full coverage insurance policy remains optional in most states. However, full coverage is often a good idea to invest in. In addition, your lender or leasing agent may require that you carry full coverage until the lease ends or you pay off your loan in full. Despite the increase in premiums, full coverage car insurance can help you stay prepared for whatever lies down the road. 

What’s covered with full coverage

Full coverage car insurance policies cover: 

• Bodily injury caused to others
• Property damage you cause 
• Damage to your car, including collisions

You can also supplement with additional coverage for a more comprehensive policy. These add-ons include pet coverage, rental cars, GAP, towing, and MedPay. Most full coverage policies come with a deductible ranging from $250 to $2,000. Coverage extends to your vehicle based on the car’s actual cash value (ACV), which reflects the value of your vehicle minus the appropriate depreciation.  

What’s not covered with full coverage 

A full-coverage car insurance policy doesn’t cover the following: 

• Your and your passenger’s medical expenses 
• Property damage as a result of an at-fault accident 
• Normal wear and tear
• Personal items left in a car (if stolen) 
• 
  

Insurance carriers may also restrict coverage based on exclusions. For instance, some carriers don’t provide ride-sharing coverage unless you ask specifically for a policy that includes that arrangement (provided the carrier offers such coverage). If you’re concerned about what a full-coverage car insurance policy may not cover, speak to your insurance representative or research a personal umbrella policy. 

For most insured drivers, full coverage costs more than liability-only coverage. Insurance rates vary from state to state and person to person, so detailing specific costs can be a challenge. However, most full-coverage car insurance policies tip the scales at anywhere from a few hundred more annually to close to $1,000, all said and done. 

Insurance rates typically stem from the following factors:

• Driver age, location, gender, car insurance history, and credit score
• Driving and claims history
• Vehicle make, model, annual mileage, and vehicle type

If you’re looking into adding a driver to your insurance or want to know what happens if you miss a car insurance payment, talk to your carrier’s local representative. They can help you adjust insurance coverage according to your needs and help explain the consequences of your choices. Comparing rates can also help budget-minded drivers get the best coverage possible. 

When deciding between liability-only and full-coverage car insurance, it’s best to consider your financial situation and ask yourself the following questions: 

• Can I afford to cover someone else’s medical expenses or property damage?
• How much is my car worth, and can I easily replace it without digging into emergency savings? 
• What are the legal requirements for basic car coverage in my state? 
• How likely will I need to repair or replace my car due to collisions with animals, theft, vandalism, or natural disasters? 
• With my existing policy, will my insurance pay for a rental car during repairs? 

Car leasing with insurance can make a difference, especially given most lenders set forth insurance requirements until the lease terms have ended. The same goes for financed car loans. Only when you own a car outright can you determine how far above the state legal requirements for car insurance you want to set the bar.