Liability Vs. Full Coverage: Which is Best for You?

The difference between third party liability and comprehensive car insurance is not that difficult to understand. Liability insurance covers property damage and other parties’ medical expenses if you cause an accident. It is legally mandated in almost every state. Comprehensive car insurance also covers damage to your own vehicle.

One way to think about auto liability insurance is that it’s not meant to insure you, but rather to cover what you might hit with your car. Liability insurance has two main components: bodily injury and property damage.

  • Civil liability for bodily injury covers the medical expenses of other drivers and their passengers when you cause a collision.
  • Property damage civil liability covers other parties’ cars, fences or other property in the event of an accident.

The amount of liability insurance you need depends on the state you live in. Most states require some liability coverage for a motorist to be on the road, but you can always purchase a higher limit to ensure you’re protected after an accident.

For example, suppose your state requires $15,000 in bodily injury liability per person, $30,000 in bodily injury liability per accident, and $10,000 in property damage liability per accident – you may see these policies written as 15/30/ 10. If you’re in a wreck and cause $11,000 in property damage, your insurer will cover up to $10,000, but you’ll still have to pay the remaining $1,000 out of pocket.

The term “full coverage” can be a bit misleading. It doesn’t mean you have premium insurance, it just means you’re covered in more scenarios. Comprehensive coverage includes liability insurance and at least two additional types of auto insurance: collision and comprehensive.

Collision coverage provides peace of mind that if damage occurs while you are driving, it will be covered. This comes into play when you hit another car, an object, if you damage your vehicle while offroading, and a few other scenarios. Collision coverage is usually not offered as a stand-alone option – it is often bundled with a comprehensive car insurance policy.

Comprehensive policies cover your vehicle for non-driving incidents, such as damage from natural disasters, vandalism or theft. The only driving incident that is covered by a comprehensive insurance policy is if you hit an animal like a deer.