Liability-Only Car Insurance Interview
Liability-Only Car Insurance Interview
Expert Advice: Understanding Liability-Only Car Insurance
Mary-Jo Kranacher
ACFE Endowed Professor of Fraud Examination at York College, CUNY
Why is liability-only car insurance less expensive than full coverage?
Liability-only insurance covers bodily injury and property damage to pedestrians, another driver, their passengers, and their vehicle when you are involved in a car accident that is deemed to be your fault. It offers no physical damage coverage to your vehicle, which is why it is less expensive.
The term “Full coverage” refers to an auto policy that includes comprehensive and collision coverage, as well as liability. Collision coverage pays for damage to your vehicle if you hit an object or another car. Comprehensive coverage pays for any damage to your vehicle, which is not covered by collision, such as fire, theft, windstorm damage, etc.
What are the primary risks for liability-only car insurance and who should consider full coverage?
The primary risk of carrying a liability-only policy is that you will have to pay out of your own pocket to have your car repaired for damages resulting from an accident that was your fault, including the cost to rent a vehicle while your car is being repaired.
Car owners should consider “full coverage” if they:
- lease or finance a vehicle, or
- purchase a car without financing that is less than 10 years old.
Most leasing or financing companies will, generally, require proof of comprehensive and collision coverage prior to releasing the vehicle, to protect their investment. For the same reason, those who purchase a newer car outright also should consider protecting their financial investment with full coverage.
***Acknowledgment: Thanks to my friends at Petschauer Insurance (www.jpins.com) for their interest in this topic, and for making suggestions that have significantly added to the substance of this article. They are located at 377 Oak St., Ste. 404, Garden City, NY 11530 and can be reached by email at personallines@jpins.com or telephone (516) 419-5050.
