Almost every state requires car insurance in order to let you drive your vehicle on the road. To select a suitable car insurance policy, you need to compare various schemes and their benefits. Two of the most common types of insurance policies are liability insurance and full coverage insurance, and listed below are the various points that can help you understand the difference between them.
- Coverage: The liability insurance is paid to the other person after an accident, when you are proven negligent. This offers coverage for body injury, car damage and medical payments of the injured person. Unlike full coverage insurance, liability insurance does not provide protection for your vehicle. On the other hand, full coverage insurance provides coverage to your vehicle against theft, fire, vandalism and flood. This policy also pays for the repair cost of your vehicle when you collide with another.
- Legal requirements: The major difference between liability and full coverage in car insurance is the legal requirement. The liability coverage is required by every vehicle driving on the road, whereas, the full coverage policy is extremely beneficial for the drivers but it isn’t usually demanded by the law. Therefore, in this case liability coverage is a necessity and full coverage insurance is a personal preference.
- Premiums: In case of liability insurance, you do not have to pay a deductible as the policy does not cover your vehicle. On the other hand, for full coverage insurance you must pay a deductible as it pays for the repair work of your vehicle after an accident. Also, it is important to note that the premium for full coverage fluctuates dramatically, depending on the type of vehicle you want to insure. Usually, expensive cars require a heavy premium to be paid.
- Suitability for older vehicles: This is another noteworthy difference between liability and full coverage in car insurance. If you have a vehicle which is eight years old or above, the full coverage insurance will not pay a heavy check for its repair work due to its lower market value. In this condition, for older vehicles, only liability insurance is necessary as it is required by the law. It will help you pay the required money to the person insured by you during an accident.
- What is not covered in the policy: As established before, the liability insurance does not cover any damage caused to the policy holder as it is for the third party. Also, intentional damages and contractual liabilities are not a part of this insurance policy. Similarly, the full coverage insurance does not cover things like full glass coverage, car rental, roadside assistance and towing, and if you want them, you will have to purchase them separately.
While the liability insurance is mandatory, the full coverage insurance is completely your choice. With the points mentioned above, you can easily spot the difference between liability and full coverage in car insurance and make an informed choice of what you want to opt for.