Insurance Agent Assessing Car Damage

Finding the right car insurance policy for you can be challenging. Along with the many insurance companies to choose from, they each offer different kinds and tiers of policies.

One of the first major decisions you will have to make regarding your car insurance policy is whether to get liability coverage or a full-coverage insurance policy. Choosing one over the other gives you vastly different levels of protection and can greatly affect your monthly and annual premiums.

In this article, we’ll help you differentiate liability from full-coverage policies, review cost differences, and help you decide which one best suits your needs.

Liability vs Full Coverage Car Insurance

Simply put, liability insurance offers very limited protection and coverage against damages. Meanwhile, full-coverage policies include liability, comprehensive, and collision insurance. 

Understanding the difference between the two types of car insurance coverage is essential to making a well-informed choice that not only fits your budget but also adequately protects you.

What Is Liability Coverage?

Liability coverage will cover car accident damage you inflict on the other party. However, liability car insurance does not cover damages to your own vehicle or medical expenses for your injuries.

There are two types or components of liability coverage:

  • Bodily injury liability: This type of liability policy covers the medical costs, lost wages, and compensation for the injuries sustained by the other person or parties involved in the accident.
  • Property damage liability: This type of liability coverage pays for damages you cause to the other person’s vehicle and property, such as car repair costs and damage to buildings or gates.

Each state has a mandatory minimum liability car insurance. However, not all states require motorists to carry a full coverage insurance policy.

When browsing and comparing liability car insurance policies, you will likely encounter three numbers describing the policy’s coverage limits. 

Here in Utah, the state government has set the minimum liability coverage requirements at 25/65/15. These numbers represent the following:

  • A maximum of $25,000 paid for bodily injury liability per person
  • A maximum of $65,000 paid for bodily injury liability per accident
  • A maximum of $15,000 paid for property damage liability per accident

As liability car insurance does not cover your own property damage or injuries, many motorists add personal injury protection (PIP) to their liability coverage.

Not all states require motorists to have personal injury protection policies. In Utah, though, the government requires drivers to carry a minimum of $3,000 personal injury protection coverage on top of their minimum liability insurance.

What Is Full Coverage Insurance?

A full coverage insurance policy will cover payment for damages to both your own vehicle and other parties. The term “full coverage” refers to an auto insurance policy that includes liability, comprehensive, and collision coverage. 

Additionally, some full-coverage auto insurance policies include other coverage for added protection.

Here are the two main components or types of car insurance that make up a full-coverage policy:

  • Comprehensive insurance: This covers claims for any damage or losses not caused by vehicular accidents, such as theft, vandalism, natural disasters, or animals.
  • Collision insurance: This coverage pays for the cost of damage your car sustains after a collision with another vehicle, regardless of who was at fault. This policy also covers damages from accidents involving road hazards.

You can further customize your full-coverage policy by adding other types of coverage. Your additional coverage options include:

  • Personal injury protection: This coverage will pay for your medical expenses, as well as that of your passengers.
  • Uninsured/underinsured motorist coverage: This insurance coverage is advantageous to have if you are involved in an accident where the driver at fault does not have insurance. This policy also pays for any difference should the other driver’s policy not be enough to pay for your damages.
  • Gap insurance: This coverage pays for the difference between what you owe in payments for the car and what your insurer will pay for the vehicle.
  • Rental reimbursement: This type of additional coverage covers the cost of a rental car while your vehicle is under repair.

Comparing Liability vs Full Coverage Policy Costs

Since liability insurance offers minimum coverage and protection, its average cost is much lower than that of full-coverage policies. The lower the maximum claims per accident, the lower your monthly and annual premiums will be.

According to the National Association of Insurance Commissioners, the average premium costs for liability coverage in Utah are $586.07. Meanwhile, the average premium costs for a full coverage insurance policy reaches $984.12.

Take note that the average premium costs for liability and full-coverage policies vary not just by state but also depending on the insurance company.

If you are looking for competitively priced car insurance policies, Ipsen Insurance can help you find the right one. We offer both liability and full-coverage car insurance for Utah residents.

 

Here is a look at the average cost of different insurance coverage across some of the biggest car insurance providers:

Insurance Company Average Cost of State Minimum Liability Coverage Average Cost of 50/100/50 Liability Coverage Average Cost of Full-Coverage Insurance
State Farm $660 $800 $1,457
Geico $513 $628 $1,405
Progressive $724 $888 $1,509
Allstate $735 $868 $1,921
USAA $409 $490 $1,225
Farmers $876 $995 $2,000
Nationwide $729 $798 $1,485
Travelers $781 $960 $1,325

 

Please note that these figures are based on insurance quotations for a middle-aged driver with a clean record.

Many states set their minimum liability coverage auto limit to 25/50/25. Take note that this minimum requirement may not be enough to cover all damages and claims if you are found at fault in an accident.

Doubling the average state-mandated minimum auto limit offers greater coverage while still being more affordable than a full-coverage policy.

A 50/100/50 liability coverage auto limit may sound high but it is only a mid or upper mid-tier limit. It is generally better than state-mandated minimum liability coverage but is still not always enough to cover all claims.

Factors That Affect Premium Costs

Car insurance premium rates are affected by several different factors. This applies to both liability and full-coverage insurance.

The same type of liability or full-coverage auto insurance may still have varying costs for two people with contrasting ages, gender, and driving records. This is why different sources may provide different insurance quotations from the same insurance companies.

The same reasoning stands for drivers with tickets or accidents on their record.

Here are some factors that may affect your car insurance premiums:

  • Age: Young drivers are often given higher premium quotations due to their inexperience and likelihood of getting into accidents.
  • Gender: Male teen drivers often pay higher premiums as they are generally considered riskier drivers than female teens.
  • Driving record: Motorists with clean driving records pay lower premiums than those with a history of violations or even just one speeding ticket. 
  • Credit score: People with a good credit score (769-794) can get lower insurance rates than those with poor (524–577) or fair (710–740) credit scores.
  • Car model: The type of car you drive also affects your insurance rates. High-end and sports cars are generally more expensive to repair, thus it will cost more to insure.

Should You Get Liability or Full Coverage Insurance?

Liability coverage is generally the most affordable type of car insurance policy for motorists. Moreover, almost all states require motorists to carry liability insurance.

Although a full coverage auto insurance policy offers greater protection, it may not always be worth it for certain people.

An easy way to figure out whether to get liability or full coverage insurance is to compare the total insurance costs with the value of your car. If your vehicle is worth a couple times more than the cost of a comprehensive and collision policy, then it is better to purchase full-coverage.

Here are other reasons to purchase full-coverage over liability insurance:

  • You are leasing your car
  • Your car is financed, either through direct lending or a dealership
  • Your car is new or less than a decade old
  • Your savings are not enough to buy or repair a new car out-of-pocket in case of an accident

If you fit into any of these criteria, then it is highly recommended that you purchase a full-coverage auto insurance policy.

Final Recommendations

Regardless of what type of car insurance policy you decide on, it is always best to compare different insurance quotations from several companies. The best insurance policy varies depending on each individual’s needs and financial capabilities.

For competitively priced and reliable car insurance rates, be sure to check out Ipsen Insurance. We offer different types of auto insurance policies, including gap insurance, accident forgiveness, and roadside assistance.

Contact Ipsen Insurance today for a complimentary, non-binding insurance quotation.

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