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To find the perfect auto insurance for you, you need to understand the different types of coverage options and the amount you need. One of the first decisions when it comes to purchasing auto insurance is whether you want to minimum liability compared to full coverage auto insurance. Find out the difference and the type of coverage that’s right for you with our guide.
Main takeaways
- Minimum liability insurance covers the cost of damage to others, while comprehensive coverage provides protection both for your own liability and for property damage to your personal vehicle.
- Most states have minimum liability requirements for auto insurance, but the level of coverage you need depends on several factors.
- Use this state-by-state guide to minimum liability coverage to find out your requirements.
What is auto insurance?
Auto insurance is basically a contract between the insurer and the policyholder. In return for monthly payments, also known as premiums, auto insurance companies provide protection for customers and their vehicles. Certainly, this transaction occurs under certain conditions described in the policy.
Definition of minimum liability coverage
Protection against damage to other vehicles or injury to other persons in the event of an accident falls under minimum liability coverage. In most states, liability coverage is mandatory. As it covers the costs of damage and damage caused to others in the accident, however, it does not cover damage or damage caused to the policyholder. For this reason, liability coverage is divided into two different categories: bodily injury and property damage.
Under bodily injury coverage, all costs related to the injury of the other person, if you were at fault for the accident, are covered up to the limits of the policy. Policy limits include the maximum amount paid per person injured in an accident and the maximum amount paid for the entire accident. For example, a policy could limit coverage to $ 15,000 per injured person and $ 30,000 for all injured.
Meanwhile, property damage liability coverage pays for all damage to other vehicles or property involved in an accident when the policyholder is at fault. The limit for this policy is shown as a single dollar amount. This results in the maximum payout per accident. It does not cover damage to your vehicle.
Even in states where auto insurance is not mandatory, it is strongly recommended that you purchase some type of coverage. Otherwise, you are financially responsible for injuries and property damage resulting from an accident.
Definition of full coverage
This doesn’t necessarily mean that you get all the benefits that come with auto insurance with full coverage. This type of coverage primarily refers to policies that include liability coverage in addition to collision insurance and comprehensive insurance.
Collision insurance protects you against situations where you are driving and another driver or object damages your vehicle. It doesn’t matter who is at fault; collision coverage will help the policyholder when needed. It is essential to know that collision coverage is not offered independently but purchased with comprehensive insurance.
When it comes to repairs and collision-free accidents like theft, vandalism, weather damage, natural disasters, falling objects and animals, Comprehensive Insurance has you covered. Collision and Comprehensive Insurance cover the costs of damage to your car up to the actual cash value. The value of your vehicle after subtracting depreciation costs from the original purchase price is considered the actual cash value.
While full coverage is not mandatory in all states, the lender often requires it if they are leasing or financing a car. With collision and comprehensive coverage, policyholders are responsible for covering the cost of the deductible. It typically ranges from $ 250 to $ 1,000.
Minimum liability compared to full coverage
When deciding between minimum liability auto insurance and full coverage auto insurance, you will need to determine whether full coverage and collision coverage will work for you. Keep in mind; Full coverage policies are already included in liability insurance.
| Type of cover | Minimum liability | Full coverage |
| What it covers | Civil liability for material damage | Comprehensive coverage Collision coverage Liability for property damage Liability for bodily injury |
| Average annual cost | $ 520.81 | $ 1,555 |
| Is it required by law? | Yes | No |
| Is it compulsory to rent or finance a car? | Yes | Yes |
Who is minimum liability coverage for?
All drivers need minimum liability coverage. Every auto insurance policy includes liability coverage and is required in all states except Alaska, New Hampshire, and Virginia. Depending on the state you live in, you will determine what type of minimum level of coverage you need to meet. Minimum liability insurance is established to protect drivers who are not at fault in the event of an accident.
Who is full coverage for?
If an insured owns a luxury vehicle or makes payments for your car, comprehensive coverage helps pay for repairs in the event of a responsible accident. Comprehensive coverage protects against theft, vandalism, weather damage and other scenarios.
| Scenario | Type of cover |
| You have a limited budget, but you must meet the minimum insurance requirements to legally drive | Minimum liability |
| Your car is very old or in poor condition, and full coverage would cost more than 10% of your vehicle’s value | Minimum liability |
| Out-of-pocket expenses for repairs or replacement value are more expensive than you can afford and more expensive than the cost of premium for full coverage | Minimum liability |
| Your car is new, rented, financed or very expensive (like a sports car or a classic car) | Minimum liability and full coverage |
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Drive with confidence
To ensure that you are adequately protected against injury, financial stress, and property damage, you want to purchase the best and most suitable auto insurance for you. Always analyze your current situation and compare quotes from different agencies to determine which insurance policy is right for you. Speak to an agent for the most accurate and up-to-date information.
Frequently Asked Questions
Is Full Coverage Auto Insurance Worth It?
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Is Full Coverage Auto Insurance Worth It?
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Jim Vassallo
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Whenever a car is worth more than the combined cost of a full coverage policy and a deductible, full coverage is well worth it. If, for example, your car is worth $ 25,000 and is involved in an accident. If totaled, the collision insurance would cover the entire $ 25,000 of your vehicle, excluding your deductible.
If you don’t have collision insurance, you lose the equity in the car. Full coverage costs drivers around $ 1,000 per year, so anyone who owns a valuable vehicle can save money.
If your vehicle costs less than the cost of full coverage, you should consider choosing only liability protection. Your premium will be significantly lower. Anytime a car is worth less than $ 4,000, it makes more sense to invest in minimum liability insurance.
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Benzinga
Does the minimum liability insurance cover theft?
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Does the minimum liability insurance cover theft?
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Jim Vassallo
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Minimum liability insurance does not cover theft if your car is stolen. In addition, you must have comprehensive insurance at the time of the incident if you are seeking to file a theft claim.
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Benzinga
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