Difference Between Liability and Full Coverage Insurance

Insurance is an investment which you make, to hedge against a risk of any kind. So, while opting for it, you need to make a realistic assessment of the degree of risk involved and opt for a coverage which offers adequate protection against it. In case of auto insurance, there are a range of policies you could opt for. Two of them are – liability and full coverage auto insurance. They differ substantially in the type of coverage offered.


Auto insurance policies come in many different types and offer varying amounts of coverage. In United States of America, it is mandatory by law that every car owner possesses a minimum amount of auto liability insurance. It only offers bare minimum coverage. In case of an accident, it pays for bodily injuries and property damage caused to a third party, involved in the accident. It does not pay for your own damages.

In every US state, there is a minimum specified amount of liability auto insurance which you have to buy. It offers no compensation for your car’s damage in case of an accident. For damages exceeding the promised compensation offered by it, you have to pay out of your own pocket. Thus, liability insurance represents the bare minimum amount of insurance that you need to drive a car in USA.

On the other hand, full coverage auto insurance offers the features provided by liability insurance, plus compensation for personal property damage, injury, and compensation for damage caused due to natural disasters. In auto insurance terms, these two coverage types are known as ‘collision’ and ‘comprehensive’ insurance respectively. These policies also offer protection against damage caused due to vandalism and theft.

Obviously, since it offers a range of features, it costs substantially more than liability insurance. If you are a new car buyer, it is highly recommended that you go for it, as it provides you with the widest coverage range overall. Even though it costs more, it is worth opting for it, as it can save you from a lot of expenses later.

Let’s see what to look out for when checking out insurance quotes. These quotes are generally provided as a set of three numbers, separated by slashes. The first of these numbers indicates the bodily injury compensation offered for one person, the second number indicates the maximum bodily injury compensation offered, while the third number indicates the maximum monetary coverage offered for property damages, if any.

A typical liability insurance quote will look like – ‘USD 60,000/USD 90,000/USD 60,000’, where the three numbers indicate compensations offered as part of the insurance policy. Other than these basic quotes, you need to read the fine print, when it comes to full coverage auto insurance, which offers more features.

Equipped with the information presented here, you can decide which insurance type is best suited for your requirements. Opting for full coverage is always a safer bet.