Should I get Full Coverage Auto Insurance or Limited Liabity Coverage?

Breaking Down Insurance Rates and Policies: Liability vs. Full Coverage

Up to 16 percent of American drivers drive uninsured, but even more drivers pay for insurance without fully understanding how it works. When there is a collision on the road, there are usually at least two parties involved; you and whomever you hit.

Liability insurance is there to cover damages done to people and property you have collided with. Full coverage is for damages done to yourself and your own property, in other words your car. Full coverage is not required by law in most places, however limited liability is.

It’s easy to remember: Full coverage means exactly that, “full and total” coverage. Liability means if you mess up you are only “liable” to fix damage you’ve caused on other people, but you are not required by law to fix your own property.

Full Coverage Insurance

If you can afford it, you should always get full coverage. Along with paying for collision repairs full coverage also provides comprehensive repairs. Comprehensive coverage just means all the things that can happen to your car.

If a tornado struck and your car is thrown into a ravine, then comprehensive insurance should cover that damage, despite how unlikely it is. Comprehensive also covers things like theft and vandalism. Of course not all collisions involve you hitting another car, sometimes you may hit a wall or drive into a ditch, collision coverage covers all that jazz too.

There is really no reason not to have the full package. Of course there are always exceptions to the rules; if you are curious about those exceptions, your insurance provider should have a full list of incidents that you are covered for; contact them for a copy.

Limited or Liability Insurance

Liability insurance generally means you are covered up to a certain amount for any damage you do to another person’s body or property. Liability insurance is sometimes referred to as Limited coverage because it does not cover damage to any of your own property.

Some states like California have liability insurance that covers personal injury up to a certain amount, but it’s not comprehensive like full coverage. A good rule of thumb is to always get full coverage, but liability is all that’s required by law, so if money is really tight you can get by with limited coverage, just drive carefully.


Your insurance coverage Limit is the highest dollar amount the insurance company will pay out on any given claim. Most insurance companies have different policies that have higher limits than others. For example if your limit is $100,000 and the damage you inflict on someone ends up costing 120,000 then you will be responsible for the $20,000 remainder.

  • The higher your limit the higher the pay out you will get after an accident.
  • The higher your limit the higher your monthly or yearly payments will be.
  • If your damages exceed your limit, then the extra costs will have to come out of your pocket


If your policy has a deductible that means you are agreeing to shoulder some of the financial burden of repairing your vehicle. Liability insurance does not make you pay a deductible, generally you only have to deal with it for full coverage.

Deductibles differ based on driving record and what type of car you drive, but your standard rate falls between $200 and $600. The number that you agree to pay in the event of an accident is called your deductible and if damages exceed that amount then your insurance will pay for the rest.

  • Generally speaking the higher your deductible, the less you have to pay in monthly premiums
  • If you go for a policy with a low deductible you’ll pay less in the event of an accident but you pay more for your over all policy.

What If I can’t afford insurance

If you can’t come up with the money to pay for a monthly or yearly plan there are some alternatives, but not many. Practically ever single state in the US requires some form of Auto Insurance if you are driving.

There is Uninsured Motorist Insurance but that’s to protect someone who is properly insured against people who are not insured at all. If you are desperate and need to be insured there are some specialty programs and steps to be taken before you give up totally:

  • There are government run care programs like the California Low Cost Automobile Insurance Program (CLCA). It’s in place to help families and individuals who qualify for a low income rate for insurance.
  • You can take driving course and safety classes in exchange for a lower insurance rate.
  • If you own and expensive car its always more expensive to insure, so ditch the Ferarri for a civic and you can use the money you made off the car to pay for your insurance bills
  • If these options don’t work for you, well then it may be time for you to start taking the bus, its imperative for the safety of others on the road that you are insured, if you can’t afford it, then stay off the road.

Legal RequirementsIt varies state by state how high or low your limits are and what kind of coverage you must get. You have to weigh all your options, if you can find a trustworthy insurance agent and company then they will work with you to find a policy that works for your budget.

If you believe you are a solid driver, then it’s not unreasonable to take a policy with a high deductible, that way you pay less up front and if you can avoid an accident you wont have to worry about the large out of pocket costs. Above all, despite what each individual state requires, I still highly recommend getting a full coverage policy.

Nothing can replace peace of mind. If you get into an accident and you don’t have full coverage your problems are just beginning, if you know you are well insured then after the accident you wont have to worry about getting your life back to normal. For more information on how to protect yourself and your finances visit Optimum Health Care El Paso. Stay Safe Out There!

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