Liability vs. Full Coverage Car Insurance

Liability vs. full coverage car insurance is a big question in today's economy where budgets are tight and people want to get the most for their money. Many companies offer to compare prices but before a person can even look at the prices, he or she needs to know what kind of coverage needed.

Minimum Required Insurance Coverage

Each state has its own minimum requirements for the insurance carried by car owners. Most states only require liability insurance. However, it is best to check on this first to avoid surprises later. This information is readily available on a state's Department of Transportation website.

Car loan companies have their own minimum insurance requirements for new cars. Usually the owner is required to carry full coverage until the car is paid off. This information should be covered by the loan officer before papers are signed.

Once a car owner knows the minimum insurance that must be carried, then he or she can begin to think about the question of whether to carry liability or full coverage insurance.

Liability and Full Coverage Insurance Basics

All states require liability insurance. This is the insurance that covers damage to property and people outside of the car.

Full coverage is a bit misleading because it takes many forms. It is an umbrella term for covering repairs to an owner's own car, theft, medical bills of any passengers in the car and more.

In addition to the types of events the insurance covers, the amount the insurance will pay varies. Most insurance plans have a deductible. This is how much the insured person will have to pay before the insurance will start paying. Insurance policies, also, have a maximum that they will pay. Once they reach that maximum, the insured person must pay the rest.

Of course, the more coverage you have, the more expensive the insurance but the greater the protection.

How to Choose a Policy

Different combinations of liability and full coverage auto insurance with different deductibles and maximum payments exist and can be confusing.

The first step is to find out the minimum insurance required by the state and find out how much this will cost. Any additional insurance will depend on two things. How much a person can afford to pay and how the car is used.

If a person drives a carpool then that person would do well to get full coverage to cover medical expenses of passengers if there is an accident, especially if the carpool regularly includes children. Otherwise, an accident could bankrupt the driver. If a person lives in an area where car theft is high or in a rural area with a lot of wildlife such a deer, then full coverage that covers theft or collisions with animals is a good idea for a just in case situation.

Each person has different needs, but sitting down and deciding what is needed, minimum liability or full coverage auto insurance with no deductible, will help a person be better protected if the worst happens.