When it comes to auto insurance, there are two main types of coverage: liability and full coverage. Liability insurance is a legal requirement in nearly every state and covers the damage you cause to other drivers and cars in an accident. Full coverage policies include liability insurance and additional protection to cover damage to your own vehicle. If you're driving a vehicle that's more than 10 years old or has a lot of mileage, or you have enough money to easily replace it, you might want to consider paying only for liability.
However, if you're still making your car payments, full coverage is generally the better option. Liability only auto insurance pays for injuries or property damage that you may cause in an at-fault accident up to the limits listed in your policy. It doesn't cover damage to your own car or injuries to yourself, only damage to other people for whom you are legally responsible. Full coverage policies include liability insurance and additional protection to cover damage to your own vehicle. If you hit someone else's property, such as another car or a neighbor's fence, the liability portion of your insurance will cover the repair costs, up to the limits of your policy. You can also add coverage for uninsured or underinsured drivers to pay for damage to your car if it is hit by an uninsured driver or doesn't have enough liability coverage. When looking for a new car insurance policy, it's important to determine how much liability insurance to buy.
It's a good idea to buy enough liability insurance to cover what they could take away from you in a lawsuit. The term “full-coverage auto insurance” does not refer to an actual type of policy, but rather a combination of comprehensive liability, collision and auto insurance. Comprehensive liability covers damages caused by events other than collisions, such as theft, vandalism, fire, hail, and flooding. Collision coverage pays for damages caused by collisions with other vehicles or objects. Auto insurance covers medical expenses for yourself and passengers in your vehicle in the event of an accident. When deciding between liability and full coverage auto insurance, it's important to consider the value of your vehicle and how much money you have available for repairs.
If you're driving an older car with high mileage or have enough money saved up to replace it if necessary, then liability only may be the best option. However, if you're still making payments on your car or don't have enough money saved up for repairs, then full coverage is probably the better choice.