Buying a car or house comes with many tough questions. You want to make sure you are covered if anything bad happens, but you also want to save some money and not break the bank trying to find insurance.

One of the major decisions is figuring out whether to buy liability insurance or full coverage. What would be the difference? How much does each one cost? Which one will be better for my situation?

These are all valid questions, and ones that have an answer.

Below is a breakdown of what both liability and full coverage insurance are, what they cover, how each one works, and the pros and cons to each.

Liability Insurance

When it comes to liability, insurance can surely save you money and cover any damage done to another person’s body, property, or vehicle.

All owned vehicles and vehicle owners are required by law to carry liability insurance, and it is with good reason.

In the case of an accident, collision, or injury liability insurance provides coverage for financial fees to anyone or property that was damaged, hurt, or killed.

What does it cover?

Two types of liability insurance provide coverage to anyone who isn’t the driver or owner: bodily liability and property liability.

  • Bodily liability: This type of insurance covers harm or damage done to a person, even yourself if you have full coverage.
  • Property liability: Here, you can receive coverage for any damage done to another person’s property caused by your vehicle.

In short, liability insurance covers any other damage or injury to someone that isn’t you. And that is where full coverage comes into play.

Who would need liability insurance?

Everyone needs the liability insurance required by law to own any property or vehicle. In the case of you or your business causing harm or damage to another person or property (even if it’s accidental), you will want to have insurance to cover expenses for repair.

If you own a small business, and not just a vehicle, you will want to consider purchasing liability coverage. Accidents do happen and if a lawsuit or extremely expensive bill comes your way as a result of an injury, it could cause financial stress.

An easy and cheaper way to get coverage in all areas is through a Businessowners Policy (BOP). It provides coverage for all liability purposes including property and bodily.

What are the pros and cons?

While liability insurance is crucial and beneficial to you or a business owner, it can be expected to find a few negatives among the positives when it comes to insurance policies.

Here are a few pros and cons to having liability coverage.

Pros:

  • Provides financial relief for medical and repair damage for other people and their vehicle
  • The risk of anyone filing a lawsuit against you may be lower

Cons:

  • Is required by law
  • Doesn’t provide coverage to injury to you or damage to your vehicle
  • Is needed before you can register a vehicle or obtain any other insurance policies

While it looks like the cons outweigh the pros, liability insurance isn’t something to ponder, since it is required by law in all states. It can save you time, money, and the hassle of dealing with lawsuits plus it provides aid to anyone who was injured by your vehicle.

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How much does it cost?

There are multiple types of liability insurance that cover whatever thing you are wanting to get insured. This includes liability for homes, vehicles, renters, businesses, ATVs and motorcycles, boats, condos, and more.

So it depends on what you are wanting to get insured, as having liability coverage for a home or business may be more expensive than coverage for an ATV or car.

Like any insurance policy, factors come into play when determining the cost: age, location of where you live, your needs, budget, policy details, and sometimes your accident/credit card history.

The best thing to do is to figure out what you are needing to be covered and shop around for a policy that fits your needs. If you aren’t sure where to start, check out the cheaper options of car insurance and go from there.

Full Coverage

Full coverage insurance picks up the slack that liability insurance leaves. Typically, full coverage has liability as part of the insurance policy and so the liability is a part of full coverage.

Full coverage provides financial reimbursement or financial coverage to any expenses and fees from medical visits, property damage, and bodily injury that is caused by you or another vehicle.

What is included?

Full coverage plans typically are made of three types of coverage scenarios: liability, comprehensive, and collision.

  • Liability coverage: If you are at fault for a collision or accident, then liability will cover the medical expenses and repair costs.
  • Comprehensive coverage: this type of coverage provides financial assistance for any damage that isn’t caused by a collision (i.e., falling trees, hitting an animal, theft).
  • Collision coverage: This covers any damage done to your vehicle as a result of a collision with another vehicle or any object in the road.

How would need full coverage?

It is not required by law to have full coverage (which includes liability, comprehensive, and collision), but it is recommended and would benefit you, your property, and anyone involved in an accident.

Anyone owning a business, property, or car would benefit from having full coverage, as it gives you peace of mind and a financial blanket in the case of accidents.

What are the pros and cons?

For full coverage, you may not consider any negative aspects to this type of insurance, but with many positives come a few negatives.

Here are a few pros and cons to obtaining full coverage over your property and vehicles.

Pros:

  • Covers all liability and damage done to you or your car/property
  • Isn’t required by states

Cons:

  • Is more expensive than liability insurance

How much does it cost?

Since full coverage provides financial relief for liability and any damage done to you or your vehicle, the price will be more expensive than just liability insurance.

A study done by AAA found as of 2020, the average insurance cost for medium sedans has decreased from $1,251 to $1,245.

If your car or property has a high value, then you will want to consider getting full coverage. The reason for this is that if you don’t have full coverage your property or car may lose its equity and not be covered for any damages done by you or another person.

What Are the Major Differences?

In general, the major thing you need to know to differentiate between both insurance types is that liability insurance covers any damage done to others (including vehicle and people) caused by your vehicle or on your property, and full coverage covers damage to other property or people and damage to your vehicle or you.

Another major difference is that almost all states require a car or property owner to have liability coverage, but full coverage isn’t required.

The Bottom Line

Hopefully, you now have a broader understanding of liability coverage and full coverage, as both of them are very important.

While liability is required and can save you lots of stress (and possibly being sued), full coverage provides the finishing touch, covering you for liability, collisions, and accidents due to anything that isn’t the result of a collision.

It is required to get liability, but it is strongly recommended that you consider getting full coverage also.

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