When you shop for a new car in Tennessee, you might see terms such as “liability car insurance” and “full coverage car insurance.” You may know what the words mean, but not the differences between the two terms. If that’s you, you are not alone; many drivers in Tennessee do not understand the car insurance shopping process.
This article explains the terms and examines the key differences between both types of car insurance coverage.
“Understanding the differences between liability and full coverage car insurance can help you make informed decisions when deciding between both,” says Attorney David Gordon of The Law Offices of David E. Gordon.
Under liability insurance, the insurer pays for property damage and injuries you cause others accidentally. For example, if someone got injured in an accident you caused, your liability insurance can cover their medical bills up to your policy limits. Other areas the insurance covers include settlements, court judgments, other fees, and the cost of legal defense in litigation.
Or, if you damage someone’s property, say their car, the insurance also covers that up to your policy limits. Your policy limits will depend on the state’s minimum requirement for liability insurance, which can be grossly inadequate.
Conversely, full coverage car insurance includes liability, collision, and comprehensive car insurance. Therefore, full coverage car insurance is not one particular policy type but a compound of three policy types. Below are what collision and comprehensive insurance types cover:
The major difference between liability and full coverage auto insurance is that the latter covers two more types of insurance: collision and comprehensive. Below is a comparison table of all three types of auto insurance coverage to help you understand better:
Coverage category | Liability insurance | Comprehensive and collision | Comprehensive |
Legally required in Tennessee? | Yes | No | No |
What does it cover? |
|
Damages due to collision with a stationary object or another car |
|
What is deductible? | None | Between $0 and $2,000 | Between $0 and $2,000 |
Policy limits | Divided into three components:
|
The Exact value of the car or damages in cash | The Exact value of the car or damages in cash |
Before you decide which insurance coverage type to purchase, you should understand each type’s pros and cons. Let’s consider the pros and cons of purchasing liability and full coverage auto insurance.
Pros:
Cons:
Pros:
Cons:
The cost of purchasing minimum liability coverage in Tennessee will be reduced by 67 percent if you buy full coverage. That means you would save about $1,812 annually on full-coverage auto insurance or $151 monthly.
Meanwhile, the cost of purchasing liability and full coverage auto insurance depends on your state. In Tennessee, average minimum liability auto insurance costs $707 and $2,237 for full coverage auto insurance.
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