Liability vs Full Coverage Car Insurance: Which is better?

Buying car insurance can be a complex process for those who are not aware of how different types of insurance work. Your insurance carrier might fool you into buying car insurance which is not even required.

Liability vs Full Coverage: Everything You Need To Know

As a result; it is always better to know all the nitty-gritty of the insurance terms before paying to any company. This blog is a detailed guide that will help you to understand the difference between Liability vs. Full-Coverage car insurance.

Each section is written such that at the end you will be clear of Minimum Liability vs Full Coverage Auto Insurance. Keep reading till then end.

What is Liability Coverage?

Liability coverage or minimum liability coverage or state insurance requirements all are the same terms. Every state in the USA has its minimum requirements for car insurance which a driver has to buy. This minimum requirement is called liability coverage.

What does liability insurance cover?

Liability insurance covers two things: Bodily injury and property damage. Every state has already defined the limit of minimum insurance for both of these liability covers. 

Bodily Injury Coverage:

If you are at fault in a car accident then you will have to cover the medical bills of the other person. Medical bills are referred to as bodily injury coverage. There are two types of bodily injury coverage: per person and accident.

Per person means you will have to pay for the medical bills of the other driver only. Per accident means you will have to pay for all the passengers and the driver involved in the accident. Every state has a predefined limit for each and most of the time per accident limit is doubt the per person limit. 

Property Damage Liability:

When you are at fault, you will have to pay for the damages you have caused to the property of another driver. It can be the car of another driver or personal property like a house, fence, or garden. And it is important to note that this does not cover the damage you have caused to your vehicle.

Do you live in a state like Virginia or New Hampshire where car insurance is not compulsory? If yes, then also it is recommended to buy the property damage liability. As most of the time, people have medical insurance but not house owner insurance. So you will have to pay for the damages.

When should I choose Minimum Liability Insurance?

Confused when does minimum liability car insurance is profitable? There are a lot of situations where minimum liability insurance is much beneficial than full coverage insurance. Here are some of the major circumstances where minimum liability insurance is beneficial:

  1. When your car in old: The insurance companies always provide coverage based on the value of your car. With time the value of old cars starts decreasing. It is better to stick to the minimum liability insurance only.
  2. If you can afford the repair cost: When you know that the repair cost of the vehicle is affordable or you know someone at the repair garage. When the repairing cost will be lower than the annual premium it is better to stick to the minimum liability.
  3. If you are a responsible driver: No one else knows about your driving skills better than you. If you have full confidence in your skills and you know there are very few chances of getting into an at-fault accident. Then also you can select the liability-only coverage because you know you are not going to need full coverage.

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How much liability insurance coverage do I need?

Every state has its legal limit for liability-only insurance. These limits can be unique in each state and hence the cost of buying liability insurance also changes. So before buying minimum liability make sure to verify the limit.

Here are some examples that can help you understand how much the limits vary:

StateRequirements
Arizona$25,000 BIL Per Person | $50,000 BIL Per Accident | $15,000 PDL
California$15,000 BIL Per Person | $30,000 BIL Per Accident | $5,000 PDL
Colorado$25,000 BIL Per Person | $50,000 BIL Per Accident | $15,000 PDL
Florida$10,000 PDL | $10,000 Personal Injury Protection
Georgia$25,000 BIL Per Person | $50,000 BIL Per Accident | $25,000 PDL
Kentucky$25,000 BIL Per Person | $50,000 BIL Per Accident | $25,000 PDL
Louisiana$15,000 BIL Per Person | $30,000 BIL Per Accident | $25,000 PDL
Michigan$50,000 BIL Per Person | $100,000 BIL Per Accident | $10,000 PDL $250,000* Personal Injury Protection
New Jersey(Basic policy) $5,000 PDL | $15,000 Personal Injury Protection
New Mexico$25,000 BIL Per Person | $50,000 BIL Per Accident | $10,000 PDL
New York$25,000 BIL Per Person | $50,000 BIL Per Accident | $50,000 liability for death per person | $100,000 liability for death per accident | $10,000 PDL | $25,000 uninsured motorist Bodily injury coverage per person | $50,000 uninsured motorist bodily injury coverage per accident | $50,000 Personal injury protection
Ohio$25,000 BIL Per person | $50,000 BIL Per Accident | $25,000 PDL
Pennsylvania$15,000 BIL Per person | $30,000 BIL Per Accident | $5,000 PDL | $5,000 medical benefits
Texas$30,000 BIL Per Person | $60,000 BIL Per Accident | $25,000 PDL
Utah$25,000 BIL Per Person | $65,000 BIL Per Accident | $15,000 PDL | $3,000 personal injury protection
Washington, D.C.$25,000 BIL Per Person | $50,000 BIL Per Accident | $10,000 PDL | $5,000 uninsured motorist property damage coverage per accident | $25,000 uninsured motorist coverage per person | $50,000 uninsured motorist coverage per accident
Wisconsin$25,000 BIL Per Person | $50,000 BIL Per Accident | $10,000 PDL | $50,000 uninsured motorist coverage per accident | $25,000 uninsured motorist coverage per person
Wyoming$25,000 BIL Per Person | $50,000 BIL Per Accident | $20,000 PDL

To drive on the roads of the USA, a driver is required to carry the minimum liability coverage. But you can always increase the limit of your liability coverage.

The benefit behind increasing the limit is; if you are at-fault in an accident then you will have to pay for the expenses of the other driver. Now the insurance company will provide coverage up to the decided limit. After that, you will have to pay for the rest.

For example, your state requires $20,000 per person for bodily injury. But the medical bills of the other driver is $30,000 then you will have to pay the rest from your pocket. This is the reason it is recommended to increase the liability limit to an amount that you can afford.

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What is Full Coverage Insurance?

Full coverage term does not mean that you will be secured from everything. It simply means that you will get covered for a wider set of risks. Full coverage insurance provides collision and comprehensive coverage along with the minimum liability coverage.

In simple terms:

Full Coverage Insurance = Liability only + Collision Coverage + Comprehensive Coverage

What does full coverage insurance cover?

Full coverage insurance provides two extra coverage; collision and comprehensive along with the liability only.

  1. Comprehensive Insurance: Comprehensive coverage is important in case of a natural or man-made disaster in your area. If your car gets damaged in thunderstorms, vandalism, falling of an object, or even stealing. Then comprehensive coverage will cover the cost of repairing your vehicle.
  2. Collision Insurance: Collision coverage is important when you get into an accident with another car, pedestrian, or object. If your car is damaged in an accident; regardless of who was at fault you will get your expenses covered.

So along with the minimum liability coverage; if your car gets into an accident then your expenses will be covered. It is important to note that your medical bills are not covered in this one. You are going to need personal injury protection cover for that.

What is not covered in Full Coverage Insurance?

Despite the name; full coverage insurance does not cover everything for you. Below is the list of coverage you might have to add:

  1. New car replacement: Do you want your insurance carrier to replace your car with a new one in case of a total loss? If yes then you can buy this coverage.
  2. Roadside assistance: This coverage will provide you free of charge assistance if your car breaks down in the middle of nowhere. The company will send free of charge help for the repair.
  3. Underinsured and uninsured motorist coverage: If you get into an accident and another driver is at fault but another driver does not have enough insurance. Then your insurance company will cover all the expenses.
  4. Personal Injury Protection: This one is to cover all your medical bills after a car accident regardless of who was at the fault.

When should I choose Full Coverage Car Insurance?

Do I need full coverage? This is one of the most frequently asked questions. Just because full coverage insurance is not compulsory drivers avoid buying it. Or just to get some extra coverage during an accident, the driver buys the full coverage insurance.

There are a lot of reasons why you should buy full coverage insurance. We have explained all the reasons below:

  • Your car is of high worth: If you know that the value of your vehicle is higher than the annual insurance premium of full coverage. If you can afford annual premium rates then it is always advisable to keep your repair expenses covered. 
  • You can not afford to replace the vehicle: When you know that you can not replace your vehicle on your own if it is totaled in a car accident. If you have an expensive car and you know you can not buy it again once it is lost. In such cases, it is better to keep your car secured.
  • Your car is on the lease or finance: Cars that are generally financed or on a lease are required to buy full coverage insurance. The financing company will ask you to buy the full coverage premium compulsory. As a result; dropping full coverage will not be an option for you.

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When you should drop Full Coverage Insurance?

Full Coverage Insurance is not beneficial for everyone, you might waste your money in some situations. Here are some reasons why full coverage insurance is not beneficial for everyone:

  • If your car is old: Older cars have a less actual cash value that leads to less claim money. When your car gets older, its value also starts decreasing. With time you will have to pay full coverage insurance more than the value of your car. If you are paying a premium that is more or equal to the value of your car then you should drop full coverage insurance.
  • You don’t drive too much: If you have other modes of transport and you use your car rarely then it’s better to drop full coverage insurance. What is the point of securing your car if you are not even using it? It is better to just buy the state minimum required coverage.
  • You are planning to replace your car: The next reason is; you are already planning to replace your car soon and you are not worried about the damages. Instead of spending the money on buying full coverage insurance, save that money and buy a new car.

The Rates Difference: Minimum Liability vs Full Coverage Car Insurance

The best way to understand the concept of liability vs full coverage car insurance is to check the difference in premium rates. Even though there are a lot of factors that affect the car insurance premium rates. But the coverage type is the base of the calculation,

Here are the top companies of the USA that provides the most affordable and best car insurance rates:

CompanyFull-Coverage PremiumLiability-Only Premium
USAA$1,457$331
Farmers$1,342$434
Geico$1,413$441
State Farm$1,481$571
Nationwide$1,271$596
Progressive$1,443$631
Allstate$1,558$763
Liberty Mutual$1,461$863
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Randy Luton RateForce CEO
Randy Luton

Randy Luton is the Founder and CEO of RateForce Insurance LLC. He is passionate about technology enable insurance services and has in-depth knowledge about the auto insurance sector of the USA.