Full coverage vs liability only

Insurance coverage is something that everyone needs but that few people feel they fully understand. You’ve probably heard of full coverage or liability-only auto insurance, but may have some questions on which is best for you. Doing your own research can provide you with an abundance of information but no real guidance. Unfortunately, even turning to the experts (the insurance companies) is often confusing. Too many companies prioritize sales over individualized solutions and customer understanding, which can leave you feeling overwhelmed and more than a little disappointed. At Elephant Insurance, we do things differently. We want you to be an active partner in your insurance planning, and we aim to foster your understanding and involvement every step of the way. With our helpful representatives, free quote-finder tool, simple car insurance explanations, and informative articles, we make sure you’re never in the dark.

One common area of confusion for car insurance customers is full coverage vs liability only. Below, we’ll go through explanations of both, the differences between the two, comparing liability and full coverage. We will help you determine which option is right for you.

What is liability coverage?

Liability coverage, also known as liability-only car insurance, covers other people’s injuries and property damage should the policyholder cause an accident. In other words, if you screw up, liability insurance makes sure that other people don’t pay the price.

This doesn’t mean that liability coverage doesn’t do anything for you though. It ensures that other people don’t have to pay out of pocket for their medical bills or repair expenses. It makes sure that you aren’t on the hook for those costs, either. So, liability insurance offers financial protection for you and for others — that’s a win-win!

Liability insurance is sometimes referred to as third-party coverage and is often broken down into two main categories: Bodily injury liability insurance and property damage liability insurance.

Bodily injury liability coverage

Bodily injury liability insurance, or BI for short, makes life a whole lot easier for other parties involved in a car accident if you were at fault by providing bodily injury liability coverage. This type of liability coverage takes care of loss of income, medical bills, legal fees, pain and suffering, and, in a worst-case scenario, funeral costs for the injured parties. “Injured parties” in this case can refer to the other driver and their passengers, as well as any bystanders or pedestrians who were injured because of the accident.

BI insurance, like many other types of car insurance, comes with a coverage limit. In this case, there are two coverage limits: the maximum amount your insurer will pay per person for each person involved in the accident, and the maximum total amount your insurer will pay overall. BI insurance limits are often written in the following format:

Bodily injury liability maximum per person payment and maximum total payment per accident

So, if you choose limits of $25,000 per person and $50,000 total for your bodily injury policy, those limits would be written as $25,000/$50,000. The exact limits will vary based on your needs, but the second number almost always refers to the maximum your insurer will pay in total (if you forget, just remember that this will be the larger number).

Let’s take a hypothetical look at bodily injury insurance in action. Say you’re on your way home from a long day at work, you’re tired, and your reflexes aren’t exactly at their sharpest. You’re a little too slow on the brakes when the car in front of you stops at a stop sign, and BAM! you ram into their bumper.

Everyone is pretty much okay, but the driver and each of their three passengers all go to the doctor to get checked out. After the initial appointments and treatment costs, the driver’s bill comes out to $15,000, and each of the three passengers medical bills amount to $20,000.

Since your insurance carries the $25,000/$50,000 bodily liability insurance limits we mentioned earlier, it’s easy to assume all four of those bills are covered. No individual bill exceeds $25,000, so you’d think insurance would cover the costs. You’re all good on that front…but will your insurance pay for the total cost of the accident?

Unfortunately, no. Since your maximum payout limit is set at $50,000 and the total medical expenses for the four occupants of the other vehicle clocks in at $75,000, you’re now on the hook for a whopping $25,000. Yikes!

Almost every state has a required minimum limit for bodily liability insurance, but as the example above shows, low limits are not your friend. In this case, low limits equal low coverage, and without more financial protection, that can be a major pain in your wallet.

Property damage liability insurance

Property damage liability insurance, or PD, is a bit less complicated and refers to property damage liability coverage. There’s only one limit to worry about, and it refers to the amount that your insurance company will pay towards the other party’s car repair costs if you cause an accident.

Property damage liability maximum per person payment and maximum total payment per accident

This is the third number that will be tacked onto the limit format we talked about above. In the earlier example, if you also had a property damage limit of $20,000, that would all be written as $25,000/$50,000/$20,000. So, if the repair bill for the car you hit in the above example only comes to $3,500, your policy will cover the entire cost.

One of the key differences between full coverage insurance and liability only insurance is that in the event of a car accident, a policy with only liability coverage does not carry any necessary coverage to pay for repairs to the insured vehicle itself.

What is full coverage?

Having full coverage auto insurance means having several different coverage levels that combine to provide you with a broad scope of protection. No insurance policy can protect you in every possible circumstance, but full coverage comes the closest. A full coverage car insurance policy generally includes liability insurance (which we explained above), comprehensive coverage and collision coverage.

Definition of full coverage car insurance

Full coverage car insurance is a type of car insurance that provides comprehensive protection for your vehicle and passengers. It typically includes liability insurance, comprehensive insurance, and collision insurance. Comprehensive insurance covers damage to your vehicle from non-collision events such as theft, vandalism, or natural disasters, while collision insurance covers damage to your vehicle from accidents or collisions. Full coverage car insurance may also include additional features such as roadside assistance and rental car coverage.

Comprehensive coverage

Comprehensive coverage covers damage to your vehicle that isn’t due to an accident. For example, if someone clips your bumper, a thief breaks your windows, or a tree branch falls on your car in a windstorm, comprehensive coverage will take care of the repair costs. Additionally, full coverage can include options like medical payments coverage to cover medical expenses for you and your passengers.

Collision coverage

Where comprehensive coverage takes care of repair expenses for damage to your vehicle while it’s parked, collision coverage covers damage to your car while it’s in motion. This means that it takes care of your repair costs after an accident, no matter who caused it. In the earlier example we went through, collision coverage would pay for the damage to your car even though you were at fault. Collision coverage would also pay for your repairs if you were to run into a guardrail or a light post, for example.

In general, where liability insurance handles the damage you may cause to another vehicle, comprehensive and collision coverage address damages to your own car.

Key differences between liability and full coverage

The key differences between liability and full coverage car insurance are:

• Liability insurance only covers damages and medical bills to other parties involved in an accident, while full coverage insurance provides comprehensive protection for your vehicle and passengers.
• Liability insurance is typically the minimum required by law, while full coverage insurance is optional but provides more comprehensive protection.
• Liability insurance is generally less expensive than full coverage insurance but may not provide enough protection for all drivers.

Choosing the right coverage for your needs

Choosing the right car insurance coverage for your needs depends on several factors, including your financial situation, the value of your vehicle, and your risk tolerance. If you have a new or valuable vehicle, you may want to consider full coverage insurance to provide comprehensive protection. On the other hand, if you have an older or less valuable vehicle, liability-only coverage may be sufficient.

Some final considerations

One benefit of full coverage insurance is its flexibility. You can choose policies with high liability limits, options with low deductibles, uninsured motorist coverage, personal injury protection, rental reimbursement, and coverage for towing and labor. You have plenty of options so you can find the exact types and amounts of coverage you need.

In short: liability coverage covers the costs of an accident that you caused. These may include the other driver’s vehicle repair costs, as well as lost wages and medical expenses for them, their passengers, and any pedestrians or bystanders who were involved in the accident.

Full coverage combines a variety of different policy types, including options like collision coverage, comprehensive coverage, and liability insurance. There are additional coverage options as well, which can take care of things like rental reimbursement costs and towing expenses.

If you’re ready to sign up for a car insurance policy, give us a call! Or, if you still need more information before you make your decision, try out our Coverage Wizard to see how much coverage you need today and know that you and your vehicle are protected.

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