All U.S. drivers have to buy auto insurance. Although each state has a minimum amount of liability insurance that drivers with cars registered in the state must buy, drivers have a number of options with the exact amount of insurance that they purchase. A driver can choose to merely purchase liability insurance, which covers damage to other people’s property, or he can purchase comprehensive insurance, which covers damage to the driver’s property.
Liability coverage is an insurance policy that covers damage to other people and their property. In auto insurance, liability coverage provides a payout to another party if the policy holder’s actions cause the person to sustain some kind of loss, either through personal injury or through damage to their property. Liability coverage only provides coverage to parties other than the driver; it does not cover injury to the driver or damage to his property.
Comprehensive coverage, sometimes called full coverage, provides compensation to a policyholder if his property is damaged or stolen in an incident related to his automobile. For example, if a policyholder has his car radio stolen or damages his car in a crash that he caused, then a full coverage policy will provide him some compensation for this loss. Comprehensive coverage is more customizable than liability insurance, as people can pick and choose what kind of contingencies they want coverage for.
Another difference between the two policies is price. Liability coverage is not necessarily more expensive than comprehensive coverage, but liability coverage for auto insurance policies does not come with a deductible. Rather, deductibles are only applied to the comprehensive portion of the policy. This means that a person has options if the price of his premiums for full coverage. If he chooses a higher deductible, his premiums will be lower, and vice-versa.
Comprehensive coverage is not mandated by any state. However, each state requires that drivers buy liability insurance, insuring that if a driver causes an accident, the other driver will be compensated for his loss. Each state sets a minimum dollar amount of coverage a person must buy in three categories: damage to other people’s property, injury to a single party and injury to multiple parties.
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