What is the Difference Between Full Coverage and Liability Insurance?

Liability coverage is the foundation of most auto insurance policies. Depending on where you live, full coverage usually includes medical payments coverage (Medpay) or personal injury protection (PIP). This coverage would pay for medical bills resulting from an accident covered up to the policy limit. It's important to note that Medpay or PIP are mandatory in most states, but not all.

Therefore, check with your agent about your state's legal requirements to learn how full coverage is required in that state. Liability only auto insurance pays for any injuries or property damage you may cause in an accident with fault up to the limits listed in your policy. Full coverage (which usually includes comprehensive and collision coverage) provides financial protection for your vehicle. Liability only auto insurance is generally cheaper than full coverage because it provides less financial protection. Full coverage is not a technical term for insurance, but it describes this specific type of policy well.

Unlike liability, a full-coverage auto insurance policy provides you with liability, collision, and comprehensive coverage. In other words, this type of insurance protects you in every aspect of your driving, including damage to your vehicle. In an accident example, let's look at how a car insurance policy with full coverage would respond. Most insurance professionals recommend that you consider buying liability coverage limits that are higher than your state's minimums, even if you decide not to have comprehensive and collision coverage for your vehicle. When thinking about which policy is best for you, keep in mind that the law requires a mandatory minimum level of liability insurance in both Illinois and Indiana.

However, your liability coverage can also be a “combined single limit”, meaning it's a number that can be flexibly used to cover the damages and injuries you cause. You can usually see how much each car insurance coverage costs when you get a quote, making it easy to compare costs before buying a policy. Full-coverage car insurance is more expensive than a liability only policy because it includes more benefits. However, you can buy higher liability limits than those required by your state and still have an “exclusive liability” policy, as long as you don't add coverage for damage to your vehicle. Uninsured motorist insurance could provide coverage if another driver with inadequate or no insurance is at fault.

Keep in mind that liability insurance will never cover your expenses after a car accident, so if you want your medical bills and repair costs covered, you'll need additional coverage. A licensed insurance agent can help a person ensure that they have the right liability coverage. If you're not sure how to determine the correct amount of coverage, you always have the option of working with a licensed insurance agent for further guidance. If you were struggling financially, if you had to pay out of pocket for damage to your vehicle after an accident in which you were at fault, or even replace your vehicle solely out of pocket, full coverage may be a good idea, even if the purchase costs more. Different states have different car insurance requirements, but almost all of them require drivers to have liability coverage. Your uninsured or underinsured motorist coverage can help you pay your medical bills if so.

Even in states that allow you to waive liability coverage, it can help protect your personal finances if you cause an accident that causes injury to another person or damage to their car or property. Civil liability covers you for the accidents you cause, but full coverage also protects you in other important ways. Having full coverage insurance will provide an extensive financial safety net that will ease some of the burden of dealing with car problems.

Carl Somilleda
Carl Somilleda

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