11: Is liability coverage the same as full coverage?
Liability coverage is not the same as full coverage, no matter how high the liability limits are. Liability coverage, in most cases, will only cover collision-related damage. It also covers damage to other drivers and passengers, as well as to the other car and property—provided you are the one at fault.
Comprehensive coverage, which costs considerably more than liability coverage, insures against many other types of loss. For starters, comprehensive insurance covers damage that is not related to the collision itself. It covers various kinds of damage to your own vehicle, like vandalism, storm damage, a cracked windshield, and more. If a tree falls on your car and you have comprehensive coverage, you are covered up to the policy limit.
It is important to note that there is a built-in limit on comprehensive coverage for damage to your car, with the upper limit set at the market value of your car. It doesn’t matter if a shop charges you $6,000 to repair the car. If its market value is $5,000, your insurer will only reimburse that amount, minus any deductible.
For example, if your car, with a market value of $10,000 is damaged in a tornado and you choose to have it repaired; the shop bill might come in at $11,000 based on labor and parts. If your deductible is $500, then the insurance company will reimburse you $9,500 in total. That’s the market value of your car less the $500 deductible.