Full Coverage vs. Liability: Which Auto Insurance is Right for You?
When it comes to choosing the right auto insurance, understanding the differences between full coverage and liability-only insurance is crucial. Both types of insurance offer distinct levels of protection, and selecting the right one depends on your vehicle, budget, and personal circumstances. Here’s a breakdown of what each type covers and how they compare:
Liability-Only Insurance
Liability-only insurance is the most basic form of auto insurance and is required by law in nearly every state, except New Hampshire. It covers damages and injuries you cause to others in an accident where you are at fault. Liability insurance typically includes two main components:
-
Bodily Injury Liability Coverage: This pays for the injury-related expenses of others, such as hospital bills and lost wages, up to your policy limits.
-
Property Damage Liability Coverage: This helps pay to repair or replace the damaged or destroyed property of others after an accident.
Pros of Liability-Only Insurance:
-
It is generally the cheapest option.
-
It meets the legal requirements in most states.
Cons of Liability-Only Insurance:
-
It does not cover damage to your own vehicle.
-
It does not cover medical expenses for you or your passengers.
Full Coverage Insurance
Full coverage insurance provides a more comprehensive level of protection by combining liability coverage with collision and comprehensive coverages.
-
Collision Coverage: This helps pay for repairs or replacement of your car after an accident, regardless of who is at fault.
-
Comprehensive Coverage: This covers damage to your vehicle from non-collision events such as theft, vandalism, or natural disasters.
Pros of Full Coverage Insurance:
-
It provides extensive protection for your vehicle.
-
It is often required if you finance or lease your vehicle.
Cons of Full Coverage Insurance:
-
It is significantly more expensive than liability-only insurance.
-
It may not be cost-effective for older vehicles.
Comparison Table
| Category | Liability-Only | Full Coverage |
|---|---|---|
| What It Includes | Bodily Injury Liability, Property Damage Liability | Bodily Injury Liability, Property Damage Liability, Collision, Comprehensive |
| Is It Required? | Yes, by law in nearly every state | Yes, if leasing or financing a car |
| Average Annual Cost | $772 to $1,407 per year | $1,970 to $4,211 per year |
| Uses Deductible? | No | Yes |
Choosing the Right Insurance
When deciding between liability-only and full coverage insurance, consider the following factors:
-
Vehicle Value: If you have a new or high-value vehicle, full coverage is likely a better option to protect your investment.
-
Budget: Liability-only insurance is cheaper but leaves you at greater financial risk if you’re involved in an accident.
-
Financing Status: If you’re financing or leasing your vehicle, full coverage is typically required by lenders.