What is the difference between liability insurance and full coverage insurance?

What kind of automobile insurance coverage do you actually require?

In most areas in the United States, you are obliged by law to have at least some automobile insurance – and even in regions where there are no requirements, you are still financially liable for any damage or injury caused by your automobile, so insurance is a smart idea in any case.

In jurisdictions where automobile insurance is needed, the bare minimum of coverage is liability insurance, which covers property damage or injury caused by your vehicle. Liability insurance is all that is required in some states. Liability insurance is the foundation of most insurance policies, although it does not cover everything. If you're attempting to figure out how much auto insurance you need, you could be torn between liability coverage and a more comprehensive policy.

There is no such thing as “full coverage” insurance; rather, the term refers to a package of coverages that includes collision and comprehensive coverage in addition to liability insurance. Let's go through your coverage options in further detail, as well as what liability insurance does and does not cover.

What exactly is liability coverage?

Most states mandate liability coverage, generally known as third-party auto insurance. There are two forms of liability insurance: bodily injury liability, which covers the costs if you injure someone with your car, and property damage liability, which covers the expenses if you damage someone else's automobile or other property with your vehicle.

Liability insurance means that your automobile insurance company will cover those expenses, at least up to the policy limitations. However, liability coverage only protects you when you are at fault, therefore there are a variety of instances in which your liability coverage alone will not cover you - this is why it makes sense to add more coverage to your policy.

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What is the difference between collision and comprehensive coverage?

The term "full coverage" auto insurance refers to a mix of no-fault liability, collision, and comprehensive coverage.

Collision insurance protects your car from damage caused by an accident, regardless of who is to blame.

Full coverage protects your car from damaged vehicles such as vandalism, fire, earthquakes, floods, extreme weather, falling items, or theft.

Optional additional coverage

Liability, accident, and comprehensive coverage will cover a variety of potentially costly circumstances when combined, but there are numerous more types of coverage that may be added to a vehicle insurance policy.

Personal injury protection: This coverage in certain jurisdictions is necessary if you and your passengers are hurt in a conflict, and pays for medical bills and other expenses.

Uninsured/underinsured motorist coverage: If a driver who has no insurance or does not cover all the damage caused has involved in a collision, the coverage will contribute to the coverage of those costs. Additionally, it protects you if you are the victim of a hit-and-run.

Gap insurance: If you have a loan or lease on your automobile and it is deemed a total loss after an accident, this will pay the difference between what you owe and what the automobile is worth at the time of the accident.

Rental reimbursement: Typically a low-cost add-on, this will cover a particular amount each day up to a certain maximum for a rental car if your automobile is in the repair.