It’s smart to comparison shop when you’re looking for car insurance. The more quotes you can get, the better informed you are. But the options can be overwhelming. What is full coverage car insurance, anyway? Why is there such a price difference between liability and full coverage insurance? Let us explain what all those different coverages mean and which types of insurance you might need depending on your situation.
Key differences between liability and full coverage car insurance
What they cover
Liability is your legal responsibility for something. So, liability insurance applies to your responsibility for a car accident. If you’re at fault for a car accident, your liability insurance will pay for any injuries and property damage you caused to others – up to the policy’s coverage limits. Your liability coverage does not pay for damage to your car.
Full coverage insurance, on the other hand, is a bundle of coverage types. Full coverage insurance includes liability, collision, and comprehensive coverage. We’ll get into the details on what full coverage insurance covers below. The key difference to understand is that full coverage insurance includes liability coverage, plus coverage for many more scenarios, including accident damage to your car.
Because full coverage insurance covers so much more than liability insurance, it’s more expensive. The average liability insurance rate for a good driver in California is $602 a year. Full coverage for the same driver averages $2,313 a year, more than triple the liability-only rate.
The coverage limits of liability insurance vary. When choosing a policy, you decide how much coverage you want. For example, you might pick a liability policy that covers $25,000 in bodily injury per person, $50,000 in total bodily injury per accident, and $25,000 for property damage per accident.
When you buy a full coverage policy, you still get to choose your liability limits. However, the coverages that pay for damage to your car max out at your car’s actual cash value, or ACV, minus your deductible. When someone says their car was “totaled,” they mean that it was damaged so severely that the cost of repairing it was more than their insurance policy’s limit.
Mandatory vs. optional
Liability coverage is mandatory for drivers in every U.S. state except New Hampshire. So, if you want to drive legally and you don’t live in the Granite State, you’ll need liability coverage. Full coverage, on the other hand, isn’t mandatory in any state. Your auto loan or lease agreement, however, might require full coverage insurance.
Who they’re best for
Liability insurance alone doesn’t cover car damage, so it’s a good choice for people who own old, low-value cars. Liability-only insurance also makes sense for folks with enough savings to afford to replace their car without the help of insurance.
Full coverage insurance is best for people with high-value cars or cars under five years old, and for people who couldn’t afford to replace their car on their own. People leasing a vehicle or financing an auto loan also usually need full coverage insurance because their lender requires it.
What is and isn’t covered by “full coverage” insurance
Full coverage insurance covers almost every harm that could befall your car. But “full coverage” isn’t actually a type of insurance coverage. Instead, it’s the name for several coverages bundled together. Full coverage includes liability, collision, and comprehensive coverage. We already covered (sorry) liability coverage, so let’s talk about what collision and comprehensive coverage protect you from.
Collision coverage pays to repair or replace your car after an accident. It doesn’t matter who was at fault – collision coverage has your back, even if you caused the accident. If you crushed your bumper backing up into a wall, collision coverage would cover the repair. The same goes for a broken windshield from a crash with another car.
Comprehensive coverage is the perfect counterpart to collision coverage. It pays to fix or replace your car for sudden, non-accident damage or loss. For example, comprehensive coverage applies to storm damage, car theft or vandalism. Oddly, it also applies to any damage to your car from a collision with an animal, like a deer or livestock.
What full coverage car insurance doesn’t cover
Though it’s called full coverage, there are some things this bundle of insurance types does not cover. This includes:
- Intentionally self-inflicted car damage (a.k.a. insurance fraud!)
- Damage to your car that goes above your coverage limits, i.e. damage that costs more than your car’s ACV minus your deductible.
- Maintenance for regular wear and tear, like oil changes and windshield wiper replacements
- Flat tires or similar tire damage that’s not caused by a crash
How much is full coverage car insurance?
The cost of a full coverage insurance policy can vary, but the average annual premium is $883. The price depends on:
- Your state and city
- The age, make, and mileage of your car
- How many drivers you’re insuring
- Your miles driven per year
- The amount of coverage and deductibles you pick
For an accurate estimate of how much full coverage would cost for your specific car and lifestyle, reach out to Surround Insurance to compare full coverage insurance quotes.
Liability auto insurance vs full coverage: the bottom line
Whether you choose liability-only or full coverage car insurance depends on your needs. Everybody’s different.
If you have a car that’s not worth too much and just want to meet the minimum required coverage for your state, you’ll probably want liability-only insurance. But if you drive an expensive car, lease or finance your car, live somewhere your car is at risk of theft or storm damage, or just want the comfort of knowing you’re covered for almost every situation, full coverage will appeal to you.
If you know what you want, Surround can provide quotes and help you compare them. If you’re not sure what kind of insurance you need, drop us a line. Our expert insurance agents can find coverage that fits your life and vehicle.