You have options when it comes to purchasing car insurance. You could choose the minimum amount of liability insurance required under state law, or you could protect yourself with a policy that offers full coverage. There are different factors that impact the cost of these policies outside of the amount of coverage offered.
The purpose of full coverage car insurance is to protect you from liability claims from other drivers while also covering your damages in a crash. This type of policy is a combination of liability, comprehensive, and collision insurance.
Liability insurance protects you from damage claims made by third parties after an accident. In other words, this insurance pays for the damage you cause when you are at fault in a collision.
Collision insurance—as the name suggests—covers damage to your car that occurs in a collision. This includes a collision with other drivers, fixed objects, or even animals. This coverage differs from comprehensive coverage, which covers non-accident damage to your car, like when a tree limb falls on it.
Full coverage provides you with compensation in all of these situations. When you file a claim, you will be entitled to recover compensation up to the limits that are on your policy. While minimum coverage might be cheaper each month, there are serious financial risks that come with those policies.
State Minimum Liability
Every state in the nation requires drivers to carry a minimum level of liability insurance. This is to ensure that drivers that cause accidents have the means to cover those financial losses.
Minimum coverage is cheaper than full coverage, but there is a reason for that. These policies generally only offer liability coverage, which means you will be responsible for your own bills if you are in a collision.
Each state sets its own minimum amount of coverage. Typically, these requirements include minimum coverage for bodily injuries per person, bodily injuries per accident, and property damage per accident. For example, the State of Texas requires $30,000 for bodily injuries per person, $60,000 for bodily injuries per accident, and $25,000 for property damage per accident. This is often written in the format of 30/60/25.