Distinguishing between liability and full coverage car insurance can be challenging. Learn the difference between these two important coverage levels.
9 minutes
12.27.2023
Sifting through the various aspects of car insurance can take hours, especially if you’re new to insuring your vehicle. You’ve likely come across terms such as “liability coverage” and “full coverage.” If you’re unfamiliar with these insurance terms, you’re not alone. However, understanding their meanings and differences can help you tailor your insurance coverage.
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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:
Liability Coverage | Full Coverage |
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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:
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.
Liability covers:
Most liability-only insurance policies waive the requirement for a deductible.
However, liability does not cover:
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:
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.
Full coverage car insurance policies cover:
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.
A full-coverage car insurance policy doesn’t cover the following:
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:
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:
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.
Learning the difference between liability and full coverage can help you determine which coverage level and type best suits your situation. Keep reading to learn more about these types of car insurance.
Many experts advise switching from full coverage to liability-only when your vehicle’s value doesn’t support the additional coverage. Cars over 10 years older tend to fall into this category, or those that aren’t worth more than ten times the policy premium.
Liability-only coverage means that your car insurance carrier will only cover the bodily injury and property damage you caused in an accident. It includes no add-ons or full coverage, such as comprehensive and collision.
Liability-only car insurance policies tend to be hundreds of dollars cheaper than full coverage, depending on the circumstances. In most cases, exact premiums will depend on several factors, including your age, gender, driving history, and the vehicle’s age, mileage, and make.
Many insurance carriers list coverage details within the policy documents sent to you when you first pay for coverage. These policy documents note specific coverage limits for the additional full coverage benefits you chose, including deductibles and value caps.
Full coverage can cover at-fault accidents, depending on the scenario. If the other driver sustains injuries and it’s your fault, your liability coverage will handle their medical expenses and any property damage.
Navigating car insurance terms and coverage types can require time, but it’s well worth it if you’re concerned about your coverage levels. Most car insurance carriers offer liability and full-coverage car insurance, depending on what you’re looking for. In many cases, it’s best to obtain the car insurance coverage you can reasonably afford to mitigate any risks to your financial assets in the future.
FINN car subscriptions help you avoid having to choose types of insurance at all. Your transparent monthly payment includes insurance, registration, depreciation, and maintenance so you can enjoy the best of car ownership. Subscribe to a FINN vehicle, choose from an extensive lineup, and have it delivered to your door. With a FINN car subscription, it’s really that easy.
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