There are two types of coverage for car insurance: full and minimum. The average cost of car insurance per year is $565 for minimum coverage and $1,674 to cover full coverage.
Full coverage is usually more expensive than basic coverage. It adds additional coverages to the policy. Why would anyone choose full coverage over liability when the cost could be higher? It is important to know the difference between full and liability auto insurance so that you can make the right decision — not just one based solely on cheap coverage — when purchasing car insurance.
Full coverage vs liability insurance
Let’s take a closer look at what the differences are between liability insurance and full coverage. Full coverage is usually more expensive than liability insurance. However, vehicle insurance is not just about the price.
Insurance coverage
Liability auto insurance covers the minimum coverage almost all states require. Liability insurance covers third-party damages if you are responsible for an accident. There are two types of liability coverage: property damage and bodily injury. Bodily injury insurance covers medical expenses of others and wages lost. Property damage insurance covers the cost of repairs and replacements for items that you have damaged in an accident, such as a mailbox, light pole, or another vehicle.
Limitations are the problem with liability insurance. Liability insurance covers the cost of repairs and medical bills for passengers who are injured in an accident that rear-ends another vehicle. Liability insurance does not cover damage to your vehicle. You will be responsible for the cost of replacing or repairing your front end.
Full coverage
Full coverage auto insurance covers the necessary liability insurance, as well as coverage for any damages or losses to your vehicle. Liability insurance doesn’t cover you if someone rear-ends you. Comprehensive and collision insurance can be combined to provide full coverage, which will pay for the vehicle’s damage.
If you are involved in an accident or collision, collision insurance will cover your vehicle and any damages to it. Comprehensive insurance protects your vehicle against other events such as flooding, striking an animals, a break in, fire, vandalism, and many more.
Although it is more costly, full coverage provides complete coverage for all damages and losses that you cause to others and yourself.
Additional coverage options
You can also add additional coverage to your car insurance to make it more customized. The most popular are:
- Personal injury protection: PIP covers medical expenses for you and your passengers, regardless of the cause. This insurance is also called no-fault insurance.
- Uninsured/underinsured motorist protection: If the party responsible for the accident does not have enough (or any) car insurance, your insurance company will pay for your damages.
- Gap insurance: A new car’s value tends to decrease quickly when you purchase it. It is likely that you will owe more on your vehicle than it is worth at first. Gap insurance will cover the difference between the amount your insurance company pays you for the vehicle, and the amount you owe in monthly payments.
- Rental reimbursement: This optional coverage will cover the cost of renting a car while your vehicle is being repaired or serviced by an insurance company.
Car insurance costs
The amount of coverage that you purchase is one of the major factors that affect the price of car insurance. Full coverage is more expensive than liability insurance. Car insurance rates are affected by other factors.
Costs by gender
Women pay less for car insurance regardless of the amount they purchase. Bankrate has a report on the average cost for car insurance that covers liability and full coverage. It is based on gender.
Carrier cost
You can save hundreds of dollars each year by choosing the right car insurance company. Get car insurance quotes from multiple carriers to find the lowest insurance. It is likely that you will find that different types of car insurance can cost significantly differently from one carrier to the next.
What coverage do you need?
It is difficult to decide how much insurance you need. First, your lender may require that you have complete car insurance if you intend to finance your vehicle. You may wish to purchase more than the minimum state liability insurance requirement, even if you are paying cash for your car.
Let’s say you live in California, and you have minimum coverage. California requires that all drivers have minimum coverage of $15,000 per person, $30,000 per accident in bodily injuries liability and $5,000 in property damage coverage. Your insurance company will not pay more than $5,000 for an accident if the damage to the vehicle is $8,000, and you’ll need to pay $3,000 extra.
This scenario suggests that you might consider purchasing as much car insurance as you can afford. If you have assets like a home or business that could be sued if you are involved in a serious accident, many car insurance professionals recommend 100/300/100 liability coverage. The 100/300/100 limits are $100,000 per person, $300,000.00 per accident in bodily injuries and $100,000 for property damages.
Questions frequently asked
What is full car insurance?
Full car insurance includes liability insurance to cover for other people’s damages and injuries as well as comprehensive or collision insurance to cover for damage to your vehicle.
What is minimum liability insurance?
Nearly all states have minimum requirements for car insurance. Liability insurance covers you for any injuries or damages that you may cause to others.
