Full Coverage vs. Liability

Are you in the market for auto insurance but can’t decide between full coverage or liability only? Or, maybe you’re still trying to decide what the difference is between the two. Fear not, below I have lightly explained some of the simplest ways full coverage and liability insurance differ.

Liability Insurance

Liability insurance is required by law when owning a vehicle and will only cover damages you’ve caused to somebody else. For example, if you get into an accident and you are found at fault and legally liable, you are expected to cover any bodily injury and property damage you have caused. If you are properly insured your insurance carrier should cover the damages incurred. However,  another thing to keep in mind is your liability limits. The liability limits you choose is the maximum amount your insurance carrier is liable to pay if you are found at fault in a covered accident.

As an example, If you choose to carry the state minimum liability limits, 20/40/15 in the state of Iowa, your insurance is only responsible to cover property damage up to $15,000. If you were to total a car with these liability limits and the property damages you’ve incurred are $50,000, you are now responsible to pay for the remaining $35,000 of property damages. The same rule applies when dealing with bodily injury coverages. An important thing to note about liability coverage is that it does not cover damages to your own vehicle.

Full Coverage

Having full coverage on your car is an optional coverage if you own your vehicle. If you are leasing or purchasing a new car with a loan, full coverage is then required from the dealership or your loss payee.

When choosing full coverage you have the option to pick your deductible, most common being the $500 deductible for both comp & collision. Having a $500 deductible means that before your insurance will pay out for any damage done to your vehicle, you are required to pay the stated $500 deductible first. Full coverage is the only coverage that will pay for damages done to your vehicle if you were to get into an accident or have a comprehensive claim such as, hail or theft. While full coverage is the costliest of coverages it is an option that should be considered when determining which coverages are best for you.

When picking your auto insurance coverages make sure you are with an agent/insurance company that will help you better understand the options you have available to you. Understand what you are getting and what is being covered.

 

Disclaimer: information provided in this article is meant to give a rough explanation between full coverage and liability only. Every accident is different with numerous circumstances. How an insurance company will cover an accident varies.