The Key Differences Between Liability and Full Coverage Car Insurance

The Key Differences Between Liability and Full Coverage Car Insurance

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.

Liability vs. Full Coverage: Differences In Meaning and Legal Operation

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:

• Collision insurance covers the repair cost to your car damaged in an accident, regardless of your role in the accident.
• Comprehensive insurance either pays to repair or completely replace your car in the event of theft, vandalism, fire, flood, falling objects, or collision with animals.

Liability, Comprehensive, and Collision Car Insurance: Key Differences

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:

Liability vs. Full Coverage Insurance: Pros and Cons

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.

Liability Auto Insurance

Pros:

• It keeps you protected from litigation in accidents where your negligence caused harm to others
• It is the cheapest overall auto insurance coverage
• There is no deductible

Cons:

• It does not cover your vehicle
• Another person’s liability policy may not cover your medical bills
• Policy limits exist

Full Auto Insurance Coverage

Pros:

• Protects all the parties in the accident, including you
• No policy limits for damages to your vehicle

Cons:

• More expensive than if you only get liability coverage
• Deductible for vehicle damages
• Depending on your vehicle and driving habits, you may not need all the coverage portions.

Conclusion: Liability vs. Full Coverage: Difference In Cost

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.