When it comes to auto insurance, there are two primary types of coverage: liability and comprehensive. Liability insurance covers bodily injuries and property damage caused to other people in an at-fault accident, up to the limits listed in your policy. Comprehensive coverage, on the other hand, provides financial protection for your vehicle from collisions with other vehicles or stationary objects, as well as unexpected events such as falling objects or natural disasters. Liability-only auto insurance is usually cheaper than full coverage since it offers less financial protection.
However, you can take out higher liability limits and other types of coverage, such as medical payments, and still have a “sole liability” policy. It's always best to have all the liability coverage you can afford, particularly if you have a high net worth. Full coverage is based solely on liability and adds additional coverage, including coverage for damage to your vehicle from collisions, as well as for non-collision incidents, such as storms and fires. While almost every state requires drivers to have liability insurance, the minimum coverage isn't always enough to cover the cost of an accident.
The distinction between comprehensive insurance and liability insurance is that comprehensive insurance covers your car when it is damaged by something other than a collision, while liability coverage pays for property damage and other people's injuries when you cause an accident. If you're thinking of purchasing liability insurance only, you should consider your state's insurance laws and your financial situation. Full coverage is usually the best option for most drivers because it provides more financial protection than liability-only auto insurance. 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. Liability limits in auto insurance are the maximum amount your insurer will pay for injuries and property damage in accidents you cause. It's essential to understand the difference between liability and comprehensive auto insurance so that you can make an informed decision about which type of policy is right for you.
While it's possible to have a full-coverage policy with low liability limits, many full-coverage policies have higher liability coverage limits to offer stronger coverage and greater financial protection for you and your family.