What Is the Difference Between Liability, Collision, Comprehensive, and Full Coverage Car Insurance

It is a universal truth that a person wanting a car must carry auto insurance. But the world of insurance can be pretty daunting. Insurance is a significant expense in car ownership, so it is crucial to pick the proper coverage. The first step to choosing the right insurance is understanding the major types of coverage, such as full coverage. 

Choosing auto insurance is not an easy process

A car that hopefully has full-coverage car insurance.
Car accident | Getty Images

While few may find it tempting not to carry insurance, it’s not a very good idea for many reasons. Most don’t want to get insurance because of the cost. However, if involved in an accident, the costs can be significantly higher than your regular monthly payment. According to Policy Genius, purchasing insurance is also the law in 48 out of 50 states.

There are so many factors to consider when buying auto insurance that it can make your mind swim. Rates vary from person to person, and even one person can receive different quotes from multiple providers. These premiums are determined based on individual factors like age, zip code, driving history, credit score, make and model of the car, and more. 

Insurance companies try to lessen the blow of the premiums by offering various discounts. You can get discounts for safe driving, attending driver’s education classes, maintaining a certain GPA in school, going paperless on your premium bill, and even paying your bill in full instead of making payments. 

Auto insurance is a complicated world, so it is imperative to shop around for the right provider who can educate you well, answer all your questions, and offer the best premium for your budget. Before you start shopping, be sure you understand the different types of coverage that may be provided to you. 

Liability car insurance 

Progressive reports that liability insurance “protects you if you’re legally responsible for the injuries or property damage in a car accident. So, instead of paying out of pocket to cover another person’s medical bills or repair their car, your insurance steps in to pay for some or all of the injured party’s expenses. Liability coverage is included with every car insurance policy and is required in almost every state.”

Your liability insurance will cover damage to other cars or property, such as mailboxes, signs, and more. It also covers injuries to other drivers, passengers, or pedestrians, including lawsuits and court fees. 

Collision car insurance 

Collision insurance is a type of coverage that can pay to repair or replace your car if you are involved in an accident with a stationary object or another car. Collision insurance can also repair or replace your car if your car is hit while parked, including hit-and-runs. It is not legally required in any state but may be required when leasing or financing a car. 

Collision insurance can be bought for cars, motorcycles, boats, and RVs. 

Comprehensive car insurance

Comprehensive insurance is an optional form of insurance that protects against damage to your car due to non-collision accidents outside your control. This can include theft, vandalism, damage to glass, fire, accidents involving animals, rocks kicked up from the road by other cars, falling branches or trees, weather, or other related incidents. 

Comprehensive insurance is not an individual form of insurance. It is included in an existing policy. 

Full coverage car insurance

Full coverage insurance is a bit of a confusing term. Technically, there is no true full coverage insurance because no insurance company can sell a policy that will have 100% coverage. However, full coverage insurance typically means comprehensive, collision policies, and anything else your state mandates. 

What is the best insurance for most drivers? Is it full coverage or something else?

There are many different types of insurance to consider when choosing the best way to legally cover your driving. Budget is a big concern for most people and is entirely understandable. 

Full coverage insurance may be one of the more pricey insurance policies, but it is still the best option for most drivers. 

According to Bankrate, it is essential to think about what would happen if your car is damaged or totaled. Could you pay for the repairs or replacement out of pocket? Could you pay for the medical expenses of anyone in your car or the other car if you are at fault in a collision? These are scenarios in that full coverage would help alleviate the financial burden. 

Bankrate sums it up like this, “In short, full coverage gives you a more robust financial protection and may be worth the higher premium for many drivers due to the coverage for your personal vehicle. However, if you used a car loan to buy your car, full coverage may be required in the contract with the lender.”

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