Liability vs. full coverage: What’s the difference?

Woman talking on phone after car accident

When it comes to car insurance, there’s a ton of information worth knowing but so many companies are guilty of either overwhelming or confusing consumers. That’s why we’re here to help keep it simple and straightforward for you.

For starters, just about every state in the country requires you to have it. It’s a fact of life when it comes to having a car. But what’s the flip-side of that? Car insurance offers you peace of mind and protection when you need it the most. So where do you get started? Let’s first start with different levels of car insurance coverage you can get.

What does liability coverage do?

Liability coverage covers other people (i.e. not you) for their injuries and property damage if you cause an accident. You’ll sometimes see this referred to as ‘third party coverage.’ Although technically, liability coverage covers others, it ultimately protects you from being financially on the hook should you ever cause an accident. Most insurers break liability into two main types: Bodily Injury and Property Damage.

Bodily Injury
Liability Bodily Injury (BI) includes medical bills, lost wages, and inconveniences of other parties in an accident if you are at fault.

Usually your BI limits are represented with two different numbers (e.g. $25,000/$50,000). Each number represents the maximum amount that an insurer will pay out per person, and the second (usually larger) is the maximum amount your insurer will pay for the entire incident.

Let’s take a look at an example to help explain this: 
You’re stuck in stop-and-go traffic (ugh) on the highway, get distracted, and then rear-end the vehicle in front of you, which had a driver and two other passengers. All three occupants of the other vehicle go to the doctor for treatment, and each of their bills is $20,000. Your insurance, which carries $25,000/$50,000 BI limits, will pay out up to $25,000 for each occupant, with a combined payout maxing out at $50,000 for all injured parties.

If you’re looking at just the first number, you may think you’re covered since the amount insurance will pay out per person is greater than each individual’s bill. However, since the total amount owed is $60,000 and your insurance payout is capped at $50,000 for all injured parties per accident, you would likely be on the hook for $10,000.

The moral of the story? It’s pretty important to carry higher limits since those medical bills can quickly sneak up on you.

Property Damage 
Liability Property Damage (PD) is a little bit more straightforward (phew) when compared to Bodily Injury. It covers the other party’s repair bill for their car if you cause an accident. It’s also the third number in the string of numbers you’ll hear agents say when they talk to you about coverage limits ($25,000/$50,000/$20,000).  Using the above example, if the car you rear-ended went to the shop and cost $3,500 to repair, your PD coverage will take car of that since it’s under your $20,000 limit.

What is full coverage?

Having full coverage means you have a combination of coverage levels that provide a higher scope of protection. Though not required in order to drive in most states, having additional coverage on your car insurance policy could really help you out since it can cover situations that liability may not. For example, Collision Coverage is a type of coverage that we recommend you consider. What does collision coverage do? It pays for your car to be repaired after an accident, regardless of who caused it. So in the above example, it’ll pay for your repairs after you rear-ended that other car. And it also applies if you hit a stationary object (like a mailbox).

Comprehensive Coverage is another type of insurance that can really get you out of a bind. This type of coverage may take care of repair expenses over and above crashes, such as weather, fire, vandalism, theft, broken windshields, or even asteroids. Think of this as ‘other than collision’ coverage. Comprehensive is an especially great type of protection to have when the weather gets dicey. For example, if there’s a windstorm and a tree branch lands on your car, comprehensive coverage will cover that cost. It can also cover glass claims, too.

To put it simply: Liability coverage pays for costs that you caused and full coverage may address damage scenarios for which you may be to blame, as well as those you aren’t (but you can’t ask a tree to pay your repair costs).

At Elephant, we think drivers should have the best coverage but at the right price. Depending on your needs and driving habits, you may need higher limits and full coverage so you can always be protected. There are tons of other types of coverage that are available, here’s where you can learn more about them.


This article is intended for informational purposes only. It does not replace or modify the information contained in your insurance policy.

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