Full Coverage vs Liability Only.
Lets start off by understanding the differences between liability only and full coverage.
Liability insurance is any type of insurance policy that protects an individual or business from the risk that they may be sued and held legally liable for something such as malpractice, injury or negligence. Liability insurance policies cover both legal costs and any legal payouts for which the insured would be responsible if found legally liable. Intentional damage and contractual liabilities are typically not covered in these types of policies.
Full Coverage insurance, includes liability insurance, which was explained above, as well as two other types of insurance, comprehensive insurance and collision insurance. You can always choose to have comprehensive insurance without collision insurance, but you can not have collision insurance without comprehensive. Now that you know that lets go over what comprehensive and collision insurance are.
To keep this as simple as possible, comprehensive insurance covers anything out of your control. Some examples of that would be, a tree falling onto your car, hitting a dear, car sliding on ice, hail damage, chip in the windshield, ect. The most important thing to remember when comparing comprehensive and collision insurance, is that comprehensive insurance claims DO NOT go against you.
Collision insurance, in a way, is the opposite of comprehensive. It is everything that for the most part, is within your control. So any damage that you cause basically while in the vehicle, that is your fault, falls under collision insurance. Since Collision insurance covers things that are your fault, that means that any claims made that are classified as collision, go against you and will raise your insurance premium.
How to know which insurance is right for you.
The best way to determine whether or not a vehicle should have full coverage or not, is to check the cars value and deductibles. For example, if I’m insuring a vehicle that is worth $5,000 or more, then I am going to recommend that the vehicle be insured with full coverage. Now if the vehicle is less than $5,000, then I will take a closer look at everything to decide whether or not its worth having full coverage. For example lets say we have a 1999 Honda Civic that is worth $2,500 according to Kelly Bluebook. And lets say we have the deductibles for comprehensive and collision set at $1,000. Lets say the premium for the vehicle comes out to be $1,000 for the year to cover it, where as if we had it for just liability, it would only cost, lets say, $500 a year to cover. In this scenario, Liability would make the most since to go with in the long run. The reason being is, if you have full coverage, paying $1,000 a year to insure the car and you get in an accident, you still have a $1,000 DED to cover. After you pay for the deductible, at the very most, you would only get $1,500 from the insurance company. Where as if you had just liability, you would be saving $500 a year in insurance and you could put that money aside, to put towards another vehicle. Within three years you would have saved the same amount of money as you would get if you had wrecked the vehicle with full coverage and gotten paid on it.