Difference Between Liability and Full Coverage Insurance

Insurance is an investment which you make to hedge against a risk of any kind. So while opting for any kind of insurance, you need to make a realistic assessment of the degree of risk involved and opt for an insurance coverage which offers adequate protection against it. In case of auto insurance, there are a range of policies you could opt for. Two of them are - liability insurance and full coverage auto insurance. They differ substantially in the type of coverage offered.

Liability and Full Coverage Insurance Comparison

Auto insurance policies come in many different types and offer varying amount of coverage. In United States of America, it is compulsory by law that every car owner possesses a minimum amount of auto liability insurance. This type of insurance only offers bare minimum coverage. In case of an accident, the liability insurance pays for bodily injuries and property damage caused to a third party involved in the accident. It does not pay for your own damages.

In every US state, there is a minimum specified amount of liability auto insurance which you have to buy. Liability insurance offers no compensation for your car's damage in case of an accident. For damages exceeding the promised compensation offered by your liability insurance policy, you have to pay out of your own pocket.

Thus liability insurance represents the bare minimum amount of car insurance that you need to drive a car in USA. On the other hand, full coverage auto insurance offers the coverage provided by liability insurance plus compensation for personal property damage, injury and compensation for damage caused due to natural disasters. In auto insurance terms, these two coverage types are known as 'collision' insurance and 'comprehensive' insurance respectively. Full coverage auto insurance policies also offer protection against damage caused due to vandalism and theft.

Obviously, since full coverage insurance offers a range of features, it costs substantially more than liability insurance. If you are a new car buyer, it is highly recommended that you go for a full coverage auto insurance, as it provides you with the most widest coverage range overall. Liability insurance cannot pay for your own car's damage in case of an accident of any kind. Even though it costs more, it is worth opting for a full coverage auto insurance as it can save you a lot of expenses later.

Let's see what to look out for when checking out insurance quotes. These quotes are generally provided as a set of three numbers separated by slashes. The first of these numbers indicates the bodily injury compensation per person offered, the second number indicates the maximum bodily injury compensation offered, while the third number indicates the maximum monetary coverage offered for property damages if any.

A typical liability insurance quote will look like - '$60,000 / 90,000 / $60,000', where the three numbers indicate compensations offered as part of the insurance policy. Other than these basic quotes, you need to read the fine print, when it comes to full coverage auto insurance, which offers more coverage features.

Equipped with the information presented here, you can decide which insurance type best suits your requirements. Opting for a full coverage auto insurance is always a safer bet compared to opting for just a liability insurance. The protection it offers for damages which occur due to natural disasters and problems like vandalism is a bonus, besides the coverage offered for damages suffered by your car in an accident. Unless it's a really old car, it's best to go for comprehensive or full coverage auto insurance.


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