You must buy car insurance if you own and operate a car, that’s a fact because that’s the law.

But knowing the law is the easy part, the hard part is knowing what coverages you must have to meet the requirements of the law.

Do you need to have full coverage or can you just get by with basic limit coverage?   To meet the law, some consumers just want a basic limit policy.   To fill that need in the market place, some auto insurance companies just sell basic limit car insurance policies.    Let’s review the different auto insurance policies.

Car Insurance Policy Differences:

Basic Limit Car Insurance:

  • The Law:   A basic limit policy is usually a liability only policy.
  • The Law:   To meet the requirement of the law that you carry insurance; most states just require a liability only policy; check with your state insurance department.
  • The Cost:  A basic limit policy or sometimes called a liability only policy can be much cheaper than a full coverage policy since you have less coverage.
  • Coverage:   With a basic limit car insurance policy your car is generally not covered; because of that premise that a basic limit car insurance policy is a liability only policy.
  • Coverage:   A liability only policy only pays for damages to the other person’s car and or body if you were at fault or liable.
  • A liability only policy does not pay for damages to you or your body.
  • Policy Limits:   The liability limit available to pay out is generally a much lower amount than a full coverage car insurance policy.
  • Policy Limits:   If your car insurance policy pays the coverage limits stated in your policy but the damages from an accident exceed those limits; you will have to make up the difference out of your own pocket.
  • Policy Limits:   The insurance company fulfills their obligation to pay a claim from your car insurance policy by paying up to (not beyond) the limits stated in your policy.
  • If you have an older car you may not think that you need high liability coverages. But be aware of the low liability coverages.
  • If you do purchase a basic limit car insurance policy be sure to ask to increase the liability coverages – because of the low liability coverages that are standard in a basic limit policy.

Full Coverage Car Insurance:

  • The Law:  With a full coverage insurance policy you will definitely meet the law requirement.
  • The Cost:  You will pay more for full coverage insurance policies because you get more coverage.
  • Coverages: A full coverage auto insurance policy provides coverage for your car, your body and the other person’s car and body.
  • Coverages:  A full coverage insurance policy includes: comprehensive, collision, medical, uninsured/underinsured, liability.