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The difference between liability and collision insurance is who’s covered. Liability insurance covers other people’s property damage and injuries after accidents caused by the policyholder, while collision insurance pays for damage to the policyholder’s own vehicle after an accident, regardless of fault.
Liability vs. Collision Insurance
| Type of Insurance | Liability | Collision |
| Is It Required? | Yes, by law in nearly every state | Yes, if you are leasing or financing your car |
| Is There a Deductible? | No | Yes, usually between $100 and $1,000 |
| Can You Purchase It Alone? | Yes, if your state does not require other types of insurance | You are usually required to also purchase comprehensive coverage |
You should consider getting collision coverage to protect yourself financially after an accident, even if it's not required by a lender or lessor. If you cause a wreck, your liability insurance alone will not cover any of your repair costs, leaving you to pay for them yourself.
Even if you are not at fault in an accident, collision insurance can be used to pay for your repairs while you await a final determination of fault and a liability insurance settlement from the other driver.
When deciding whether or not to purchase liability-only insurance, consider the value of your car and your financial situation. A general rule of thumb is that you can think about dropping collision insurance if your premium is more than 10% of your car’s value, but you shouldn’t drop it if you can’t afford to pay out of pocket for repairs after an accident.
People also ask
What is collision insurance?
Collision insurance is a type of car insurance coverage that pays to repair or replace your car if you’re involved in an accident, regardless of who was at fault. Collision car insurance is never required by state law, but dealerships and banks usually require it for leased or financed cars. It only pays for damage to your own vehicle, and it does not include coverage for medical bills.
What Collision Insurance Covers
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When should I drop collision insurance?
You should drop your collision insurance when your annual premium equals 10% of your car's value. If your collision insurance costs $100 total per year, for example, drop the coverage when your car is worth $1,000 since, at that point, your insurance payments are too close to your car's value to be worthwhile. Drivers can easily find a car’s value with the online vehicle appraisal calculators from Edmunds or Kelly Blue Book.
When to...
read full answer by Winslow Arizona, Car Insurance WriterWhat is liability only insurance?
Liability-only insurance is car insurance that covers a third party's property damage or injuries in the event of an accident. The term “liability-only car insurance” is used to distinguish policies with basic coverage from those with collision insurance and comprehensive coverage.
Liability insurance is the only type of auto insurance that is mandatory in almost every state. It’s split into two main categories of coverage: bodily injury liability and property damage liability.
What Liability-only Insurance Covers
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