Liability Insurance vs. Full Coverage

Most states require liability car insurance. But you may also need full coverage. Here are the key differences between them.
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In the car insurance world, you might hear people use words like full coverage and liability insurance. It can be hard to know what it all means at first, especially when full coverage includes liability insurance. It’s important to learn what they are and how they’re different. This way you can know what you’re getting yourself into when you’re buying insurance.

This article will explain the differences between liability insurance and full coverage. We’ll define each one and break down what they cover. You’ll also find out whether you may need either one. Finally, we’ll answer some frequently asked questions about liability insurance and full coverage.

Basic Differences Between Liability and Full Coverage

Below is a table listing some key differences between both terms. You’ll notice that full coverage includes liability insurance but is not a type of policy itself. But liability is a type of coverage that most states require you to have on your policy.

Liability CoverageFull Coverage
Is a type of car insuranceNot an actual insurance policy
Is usually a state requirementNot a state requirement
Protects drivers from paying the other party’s damagesIncludes collision coverage
Doesn’t cover your own car’s damagesIncludes comprehensive coverage
Doesn’t cover your own injuriesCovers injuries in some cases
Covers both property damage and bodily injuryIncludes liability insurance

What is Liability Insurance?

Liability protects you if you’re at fault in an accident and must pay the damages. It will pay for the other driver’s expenses so you don’t have to. Most states require you to have it. Check out our liability insurance article to see a more in-depth guide on this type of coverage.

What Does It Cover?

Liability insurance covers a few important things. Remember that it only kicks in when you’re at fault in an accident. Here’s a list of what it covers:

  • Property damage to the other person’s car
  • Other property damage (light posts, streetlights, buildings, etc.)
  • Bodily injury that the other party sustains e.g., medical bills, lost wages, EMT fees, etc.

What Doesn’t It Cover?

Liability doesn’t cover any damage to your car or any injuries you may have after an accident. Liability only protects you from having to pay in full for the other person’s damages/injuries. Coverages like MedPay and personal injury protection (PIP) will cover your injuries. Also, collision insurance would cover damages to your car in an at-fault accident.

What is Full Coverage?

Full coverage is a term that insurance companies often use when they’re talking about multiple insurance types of coverages. When an agent refers to full coverage, they are talking about a few different types of insurance combined into one policy. These coverages are:

When you have all three, that is when you have full coverage. Other coverage options are available as well, such as:

What Does It Cover?

Since there technically isn’t a full coverage type of insurance, it doesn’t cover anything in particular. But, the types of insurance that it includes cover quite a bit. By buying full coverage, you’ll get protection from:

  • Collisions with other cars, even if your car is sitting in a parking lot.
  • Theft
  • Vandalism
  • Natural disasters and other random events that damage your car
  • Accidents where you’re liable to pay for damages/injuries

Keep in mind that full coverage only refers to a package of insurance types. It’s not a type of coverage itself. The above situations fall under collision, comprehensive, and liability insurance. The combination of these coverages amounts to full coverage.

Who Needs One Over the Other?

Most states require you to have at least some amount of insurance. Liability is usually the most common one that states require. This is because it, at the very least, protects the other party from having to pay for any damages. Be sure to check your state’s laws to see that you have the proper amount of insurance.

Full coverage is usually a requirement if you’re financing your car. Your lender will normally require you to buy it. They do this to protect their financial stake in your car. If you were to buy your car outright, you wouldn’t need to worry about this. Be aware of this if you’re thinking of leasing or financing a car.

Besides state requirements, it’s a good idea to fully protect yourself from all the risks out there. Not doing so could result in you having to shell out loads of cash out of pocket to pay for an unforeseen accident.

The key takeaway is that you’ll probably need to buy liability insurance, but you may want to get full coverage so that you don’t have to worry about the possibility of an accident costing you a ton of money. And you’ll most likely need full coverage if you’re taking a loan out to buy your car.

If you’d like to explore full coverage pricing, compare quotes from a few insurance companies. It’s never a good idea to buy the first policy you’re offered. Rates vary quite a bit and full coverage, while much better, costs more. So, do your due diligence and you’ll find a better deal.

Frequently Asked Questions

Q: Which insurance do I need to legally drive?

A: Liability insurance is what you’ll need to legally drive. Most states require you to carry it on your policy. Be sure to check your state’s laws to know which types of insurance you need.

Q: Do I need full coverage?

A: Legally, you don’t need it to drive. But it can be a smart move. This is because it gives you a broader range of coverage than basic liability insurance. You may also need full coverage if you’re financing or leasing your car. It helps you avoid paying lots of money out of pocket if a random accident damages your car.

Q: What is considered full coverage?

A: This is usually when you have three specific types of insurance on your policy. These types of auto insurance are:

  • Collision
  • Comprehensive
  • Liability

When you have those three, that’s what insurers mean when they say full coverage. These aren’t the only types of car insurance, though. Check with your agent to go over the entire list of options that your carrier can provide you.

Q: Is full coverage better than liability?

A: While liability is the most basic form of insurance that states require, it might be worth it to get full coverage. Liability only protects you from having to pay property damage/bodily injury costs for the other party in an accident. Having full coverage protects you from:

  • Damage to your own car in an accident
  • Vandalism, theft, natural disasters, and other random events that comprehensive insurance covers.

Having liability insurance only protects you from a couple of different costs. On the other hand, full coverage gives you the whole spectrum of protection, making it the more complete choice.

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