Can a Liability Only Policy Save Money?

Most people experience some difficulty with knowing what type of insurance, whether liability or full coverage, will save them the most money and be the all around best option. Unfortunately, there is no easy answer to the question. The type of insurance that will be best for an individual depends greatly on his or her exact situation and on many other individualized factors. This article, however, will cover the differences in the two in an effort to help potential policy holders choose the coverage that will save them the most money in the long run.

Each state requires drivers to have some sort of liability insurance, and the rules on how much coverage one must have differ greatly from area to area. Some people can only afford to meet the state minimum for their area, but in most cases, it is better to go at least a bit beyond the minimum coverage. This may end up costing more out of pocket, but it will save drivers money in the long run – especially if accidental damage does occur.

Before signing up for any policy, drivers should understand how state minimums are expressed in order to accurately understand their policy. State minimums are written in three different numbers. The first number indicates the maximum amount the responsible driver’s insurance will pay for the injuries one individual incurs; the second number indicates the maximum amount that can be paid for all injuries in an accident; and the last number represents the maximum amount one’s insurance will pay for property damage. What is most important to keep in mind when considering these numbers is that whatever falls outside the realm of the policy will be left to the responsible party to pay, so having a good insurance policy can save drivers hundreds of thousands of dollars, depending on the accident and damages sustained.

Full coverage is more expensive than liability coverage, but it also encompasses two other types of coverage – comprehensive and collision. Comprehensive coverage takes care of damages (such as small dents or weather damage) not including collision to the policy holder’s vehicle, while collision insurance takes care of any damages resulting from actual accidents. Users may opt to have only comprehensive insurance, though this can sometimes be risky. It is also important for policy holders to check with any finance companies or car dealerships involved in the payments on their cars, as some of these require the driver to have collision insurance.

One must take all of these factors into consideration when choosing an insurance policy. It is important to be sure that the policy chosen meets all state requirements and also meets the requirements set forth by one’s car dealer or financial lender. Accidents can happen at any time, but many drivers are able to assess how much coverage they will need by carefully and honestly reviewing their past driving record. If many accidentshave occurred and are likely to occur again, a more expensive but more protective policy is often the way to go. For the average driver, however, finding a “happy medium” – a policy that is not the bare minimum but that is also not the most expensive – is the best choice.

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