Liability vs Full Coverage Auto Insurance: What You Need to Know
- Liability vs Full Coverage Auto Insurance: What You Need to Know
There’s so much information about auto insurance that you may not even know if you’re one of many drivers on the road who are underinsured.
Numbers are thrown into the mix that you have no idea about. Plus there are multiple coverages and multiple coverage amounts listed on your policy. At the end of the day, auto insurance, like many other insurance policies are set-it-and-forget-it coverages that you pay each month and only call on when you need them.
But you should be aware of your coverage. Do you know if your vehicle is covered in an at-fault accident, how much your policy will pay toward the other vehicle or the passengers involved in the accident?
It’s time to get acclimated with the protections in your policy, and this is everything you need to know about liability vs. full coverage auto insurance.
What Is Liability Insurance Coverage?
Since auto insurance is required by law, liability coverage is the minimum amount of auto insurance you can legally have and still operate your vehicle. If you’re found liable for an auto accident, it helps to pay to repair the other person’s vehicle and any medical bills to passengers of the other vehicle due to the accident.
Liability policies are structured with three numbers, typically something like 100/300/50. Each number represents a different amount of coverage and coverage type. This is what they mean:
- Up to $100,000 for injuries per person
- Up to $300,000 for injuries per accident
- Up to $50,000 in property damage per accident
If you have auto liability insurance, you’ll see the following two coverages within your policy. These are standard in every auto policy, but the minimum and maximum coverage amounts may be totally different.
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Property Damage Liability
Property damage liability insurance covers any physical or maintenance damage to the other vehicles involved in the accident if you are at fault. Coverage amounts for property damage liability usually range from $10,000 to $100,000 per accident, so you’ll need to take into account where you live and what kinds of cars are on the roads.
The minimum legal property damage coverage is $10,000, but that amount won’t be enough the majority of the time. Let’s say you accidentally rear-end a car at a stoplight and cause $15,000 in damage to that vehicle. After paying your deductible, your insurance company would pay up to $10,000 and you’d be responsible for the rest.
Now let’s say assume you live in a ritzier area with a number of overpriced vehicles. If you’re taking a sip of your morning coffee, get distracted and run into the side of a $75,000 vehicle and total that car (plus you only have $10,000 in coverage), you’re in some serious trouble. You’d be on the hook to pay $65,000.
That’s why we recommend getting at least $50,000 in property damage coverage. That way you’re fully covered if you get in an accident with, and total, an average vehicle, and you’re still pretty safe for higher-end areas.
Bodily Injury Liability
Bodily injury liability is always a higher number than property damage because it helps to pay for any medical bills associated with the accident. So if you have 100/300/50 coverage, like the above example, and you were found liable for an auto accident with a vehicle carrying three people, your bodily injury liability coverage would kick in and help to pay for their medical bills if they sought medical attention.
That would mean your policy would cover each person’s medical bills up to $100,000 per person and $300,000 per accident. So if all three sought medical attention and their bills were $50,000 each, you’re still in good shape.
Where it gets tricky is serious accidents or those that involve more people. If you ran into a bus carrying 20 people and 10 of them sought medical attention, you may be holding your breath. If each person’s medical bills totaled $30,000 each, your maximum for total injuries would cover it. But if the medical bills exceeded that amount, you’d be liable to pay the remainder out of your own pocket.
What Is Full Coverage Auto Insurance?
Full coverage auto insurance means you have the same protections of liability coverage, so your policy covers damage to the other vehicle and injuries to the people inside, plus it covers damage to your vehicle and injuries that you or your passengers sustain in the accident.
But just because it’s called full coverage doesn’t mean you’re fully covered in every incident. Like liability, there are policy minimums and maximums that you need to be cognizant of. It’s also worth noting that a full coverage auto insurance policy can have collision and comprehensive coverage.
Property Damage Liability
Full coverage also has property damage liability that covers the other vehicle involved in an accident if it were deemed to be your fault. In this case, and bodily injury, these coverages are the same in both liability and full coverage.
Bodily Injury Liability
This structures the same as bodily injury within liability coverage in that it covers medical bills for people in the other vehicle if the accident was deemed your fault. It has maximum coverage amounts per person and per accident.
Collision coverage is really where full coverage separates itself from strictly auto liability insurance. Collision coverage helps pay for damage to your vehicle, whether or not the accident was your fault.
For instance, if you’re involved in a one-car accident because you accidentally hit a tree, collision coverage would help to pay for the damages to your vehicle. You’ll still have to pay your deductible, but the amount you pay in policy premiums is well worth getting collision coverage.
Comprehensive coverage is also known as “parked coverage” because it works when your vehicle wasn’t involved in a moving accident. Comprehensive coverage helps pay for damage to your vehicle if scenarios like weather-related damage, theft or if you get really unlucky and an old tree happens to fall on your vehicle.
Difference Between Liability and Full Coverage
The difference between liability and full coverage is simply that auto liability insurance only covers damage to the other vehicle and medical expenses related to the accident if you’re at fault. People with liability coverage are financially responsible for damages to their own vehicle and any medical expenses they incur.
Full coverage auto insurance helps to pay for damage to another vehicle and related medical expenses if they are at fault, plus damages to their own car and their own medical expenses. It can also cover weather-related damage like hail, theft and a number of other non-driving incidents.
While full coverage auto insurance is more expensive than liability coverage, it isn’t by too much. Depending on your driving history and vehicle, collision and comprehensive coverage can be added to your policy for as little as $100 per month. Personally, I pay $190 extra per six months, but it gives me a solid peace of mind knowing my vehicle and I are covered in all scenarios.
With full coverage policies, you also have the option to purchase rental reimbursement coverage and roadside assistance, which are two solid additions to your policy that don’t rack up your premiums too high.
Liability vs Full Coverage: Which Is the Winner?
Full coverage auto insurance is the clear winner because it covers the other vehicle and your vehicle in an at-fault accident. Plus, you get to add roadside assistance and comprehensive coverage to your policy if you so choose.
While liability may be a few hundred dollars cheaper than full coverage each year, a single at-fault accident causing major damage to your vehicle (or totaling it) would be paid for in groves compared to the increase in premiums you pay to upgrade to full coverage.
While the cost differentiation is determined by your driving history, the type of car you drive, the city in which you live and the state in which you reside, we highly recommend getting a full coverage auto insurance policy to protect yourself and your vehicle.
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The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.