Let's be honest – we have all said "Full Coverage" with reference to car insurance. Even us insurance agents have said it once or twice (because of its popularity with the general public). But do you know what it really means? And how does it affect you? How about liability insurance only? Do you know what it means? And how to decide which option is best?
This article contains definitions, examples and tips to determine if only liability insurance or "full coverage" car insurance is the best option for you.
What does "Full Car Insurance" Mean?
Let me first say that "full coverage" is a compound word. There is no such thing, because no insurance "completely" covers anything. However, as it is a very common word used by a large part of the population, I will offer a definition. Full coverage usually means that someone is responsible PLUS collision and extensive coverage. Some quick definitions to help with this:
- Liability ̵
- Extensive and collision – pays for damage to YOUR vehicle.
- Extensive covers fire, theft, vandalism, glass, falling objects and animal contact.
- Collision is a collision with another object besides animals, overturning or agitation of your car and occasional car accidents such as getting off the road.
When you talk about full coverage of car insurance, you usually talk about having liability PLUS comprehensive and collision coverage.
What is liability insurance only?
Only liability insurance leaves YOU out of the picture and only covers OTHER people and their property. The other person's part is quite easy to understand – can be people in the other vehicle or even a pedestrian. The bodily injured part of the liability cover pays for damages suffered by the other person. The property damage pays for all property you damage as a result of the accident. Examples are a vehicle, house, fence, commercial building – you get the idea. Someone else's property.
It also makes sense that the smaller pieces you have in your car insurance, the smaller the premium. So only liability insurance for cars is cheaper than an insurance that also covers extensive collisions (ie the term "full coverage" you are used to using).
Liability insurance is what the state of Ohio requires to show that you are financially responsible for operating a vehicle.
Tips for Deciding If Only Car Liability Is Best For You
Here are two things to keep in mind before choosing to only be responsible for car insurance.
- How much money do you have in savings? If your car was totaled tomorrow, would you have enough to buy a vehicle to replace it? If you only had one payout, could you handle car payments financially?
- How much is your car worth? If the car is worth $ 10,000, you would be more likely to insure that value. If it's only worth $ 1000 or less, you may feel it's a risk you're willing to take.
The key here is to think about what would benefit you the most. Look at the insurance cost for liability insurance only or full car insurance coverage (tips, hints – we can run this comparison for you.)
Note: The exception to this rule often occurs when adding a teen driver. In this case, a "only liable" car may be a good idea to save big premium dollars, as the majority of the car insurance premium for a teen driver comes from the extensive coverage (we have seen 50-65% easily). And as always, you can contact our friendly agents to indicate differences in vehicle and coverage when getting ready to add a teen driver.
Do you need help choosing which option – only car insurance liability or full insurance car insurance – is right for you? Fill in the form below and we will be happy to review your policy!