What's The Difference Between Collision And Liability-Only Auto Insurance?

Sherri Ramos

People who have never purchased car insurance themselves often have a lot of questions about the types of coverage they need. One of the big questions involves finding out the differences between collision coverage and liability-only coverage. If you are wondering what the differences are with these two basic types of insurance coverage, there are several things you will want to know about personal auto insurance.

Each covers different things

Both collision and liability coverages are good types of insurance to have for your car, but each covers different things. The best way to understand liability coverage is to think of the coverage you need if you cause an accident. In this case, it is your liability coverage that will pay for the damages to the other party involved in this accident. Therefore, liability coverage is designed to protect others if you cause damage to them or their cars.

Collision coverage is for you, though. Collision coverage is what provides compensation to you if you cause an accident and end up damaging your own vehicle. Collision does not pay for the damage to other people. Instead, it is only for you in the event that you cause an accident.

Both types are mandatory if you have a loan

The second difference with these coverages is that both are mandatory if you have a loan on the car, but only liability coverage is mandatory if you do not have a loan on the car. Liability coverage is a state requirement, and it is a law to have it simply because it protects innocent people. Collision is required by car lenders as it protects their interests in the deal.

Having both is the best way to protect yourself

Now that you understand the key differences between these two types of coverage, you should understand that the best way to protect yourself is by having both types. If you have both types, you can meet the state requirements and your lender's requirements, and you will not be out a lot of money if you end up causing a car accident at some point in time.

If you would like to have enough protection on your car, you should get collision and liability coverage for your car. In addition, you should also consider adding other types of coverage too, such as comprehensive insurance. You can learn more about these types of insurance coverages by talking to an insurance agent today.