FAQ

Liability vs. Full-Coverage Car Insurance: Which Is Better? – ValuePenguin

Liability insurance only pays for injuries and damages to others for whom you are responsible. By comparison, full coverage policies cover both your liability and property damage to your own vehicle.

When finding the right auto insurance policy for you, it’s important to understand the different types of coverage and how much you need, including whether you want liability or full coverage auto insurance.

Reading: What does limited liability car insurance cover

responsibility vs. cost of full coverage insurance

On average, we found you could save over $1,300 per year when you buy minimum liability coverage instead of a policy that includes comprehensive and collision insurance and higher liability limits.

farmers is the most expensive for full coverage: a policy costs $2,527 per year. however, farmers-insured drivers could save $1,586 by choosing minimum liability coverage.

what is liability insurance vs. full coverage?

The exclusive civil liability car insurance will cover damage to other vehicles or injuries to other people while driving. full coverage policies include liability insurance and additional protection to cover damage to your own vehicle.

In most states, you must have a minimum amount of liability coverage. comprehensive coverage includes the liability coverage required by your state plus comprehensive and collision coverage. usually only required if you lease or finance your car.

what is liability only insurance?

Liability insurance covers the cost of injuries to others and damages you cause in an accident.

See also: What is considered full coverage for auto insurance in texas

Liability coverage is divided into two components: bodily injury liability and property damage liability.

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what is full coverage insurance?

Full coverage does not mean a policy has all the bells and whistles. this term refers to policies that include liability coverage along with collision and comprehensive insurance.

Comprehensive and collision insurance will generally pay for damage to your car up to its actual cash value. When making a comprehensive or collision claim, you will be responsible for meeting the cost of your deductible, which can range from $250 to $1,000.

You may need to purchase this coverage because it ensures you’ll be able to pay off at least a portion of your loan if your car is in an accident.

is it better to have full coverage or liability insurance only?

Do I need full coverage on my car?

If your car is rented or financed, the bank or car dealer may require you to purchase a full coverage policy.

If you own your vehicle outright, you are not required to purchase comprehensive coverage. however, comprehensive coverage is worth the cost if your car is newer or more expensive, or you have trouble paying for a replacement if it’s destroyed or stolen.

when should you cancel full auto coverage?

As your car ages, comprehensive and collision coverage gets worse. That’s because a car’s value drops faster over time than the cost of comprehensive and collision coverage.

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The right time to drop full coverage will vary based on your overall financial situation and risk tolerance. however, drivers should consider dropping comprehensive and collision coverage when the value of their car drops between four and six times the annual cost of coverage.

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The value of your car will depend on its age, mileage and general wear and tear. Insurers use their own methods to estimate the value of a given used car, and you may not be able to assess the value of your car yourself.

If you want a ballpark figure on your car’s value, Kelley Blue Book and other auto value estimators can help you estimate your vehicle’s value. Although not exact, this number can guide you as to whether the value of your car exceeds the cost of purchasing comprehensive coverage.

methodology

To compare auto insurance rates, we collected quotes from every state. our sample driver is a 30 year old male who drives a 2015 honda civic ex with a clean driving record and average credit score.

Our auto insurance rates for minimum coverage policies show the average cost of a policy that meets each state’s minimum auto insurance coverage requirements.

full coverage rates are based on the following limits. if these limits are lower than those of a given state, the price has been adjusted to match the limits of the state.

valuepenguin’s analysis used insurance rate data from quadrant information services. These rates were obtained publicly from insurer filings and should be used for comparison purposes only; your own quotes may be different.

See also: Why is life insurance not a good savings plan

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