What is Full Coverage Insurance?
Find out what full coverage insurance is and how it works with Malhotra & Assoc. Call us at 1-800-945-1410.
Full coverage car insurance is the combination of liability, comprehensive, and collision insurance that helps both yours and others vehicles. These three coverages can be combined with other policies your insurer carries.
Liability
Liability coverage is usually included in all auto policies because it’s required by law in most states. There are two types of liability coverage: 1) Bodily Injury Liability Coverage and 2) Property Damage Liability Coverage. Bodily Injury Liability will help pay for another person’s medical expenses if you are at fault in an accident. Property damage liability will help pay for damage you cause to another person’s property if you are at fault for an accident. As liability coverage is required in most states, each state sets a minimum coverage limits that drivers are required to purchase. You may want to consider going beyond the state’s requirements and purchase a policy with higher liability limits. The higher coverage limit may increase your premium, however you’ll have more protection if you cause an accident.
Comprehensive
Comprehensive coverage helps pay to repair your vehicle if it’s stolen or damaged by things caused by weather, animals, or vandalism.
Collision
Collision coverage helps pay to repair/replace your vehicle if it’s damaged in a collision. This can be from another vehicle or an object, such as a tree. This coverage only covers you. If you needed to pay for the damage caused to another vehicle, it would be considered property damage liability.
How does full coverage insurance work?
While there is no such policy considered to be ‘full coverage,’ you can combine as many policies as you would like till you feel comfortable. The minimum coverages required are liability, collision, and comprehensive. In addition to these three, you can add more policies. This inculdes:
- Medical Payments and Personal Injury Protection: helps pay the medical bills for you or others who are in the vehicle with you. It can also cover lost wages and other personal expenses resulting from the accident.
- Uninsured/Underinsured Motorist Coverage: in the case you collide with a uninsured or underinsured driver, this will help pay for medical costs. This can also be utilized if the driver flees the scene.
- Gap Insurance: this insurance is especially useful if taking out a loan for your vehicle. If you owe more on your loan than your car is worth and have an accident, you will be responsible for that “gap” unless you have this coverage.
- Car Rental Coverage: this coverage can be purchased when you buy liability, comprehensive, and collision coverage. This will cover any damages obtained while using the rental car.
Related Reading: Learn about when you might need gap coverage.
What is the difference between comprehensive and full coverage?
Comprehensive coverage will cover the costs to repair your vehicle if it’s stolen or damaged. Full coverage insurance will cover the costs of your vehicle if it’s damaged in a collision, other’s medical expenses, and other’s property damaged in an accident.
Should I keep full coverage on a car that has been paid off?
Once you’ve made your final car payment, you do not need to carry any more than the minimum amount of liability required in your state. Dropping full coverage can also save you hundreds of dollars a year. However, dropping full coverage will result in you paying out of pocket if your car was stolen or vandalized. If your car’s value is less than $2,500, it is recommended that you end the collision coverage. Additionally, if your car is under 10 years old, it is recommended that you keep comprehensive and collision coverage. Deciding when to drop full coverage is a decision only you can make. Important points to consider are would you be able to pay to fix your car if it had a major mechanical issue? Can you afford to replace your vehicle if it is damaged or stolen?
Do I need full coverage for a financed car?
If you drive a financed car, your dealer will require you to carry liability, collision, and comprehensive coverage. The car is not yours yet and as long as you are still paying the lender, full coverage is required to protect the investment. If you do not have full coverage and the car is damaged or totaled, the dealership would have to get the money for repairs/replacements from you. This is much harder to manage than having insurance pay for it. Additionally, if you drop the required auto policy from a financed vehicle, it is a violation of your contract and may put your loan in danger. The lender could place single interest coverage on the vehicle and add the premium to the loan. This type of coverage is expensive and does not provide any coverage for you, just the dealer.
How do I know when I need full coverage insurance?
Liability coverage is required in most states, but comprehensive and collision coverage are not. So, how do you know if you need full coverage? If your vehicle’s worth is over $2,500 or under 10 years, it is recommended that you purchase full coverage auto insurance. If you cannot afford to pay out of pocket for any damages or a replacement of your car, it is also a good idea to have full coverage.
What is the difference between full coverage and liability insurance?
There are 2 types of liability coverage which includes bodily injury liability and property damage liability. In the event that you are found at fault for an accident bodily injury covers medical related liabilities associated with an accident whereas property damage liability covers any property damage that’s associated with an “at-fault” accident. Full coverage insurance refers to comprehensive and collision coverage specifically and assumes no-fault liability coverages. With that being said, most states require liability coverage in some form or fashion. Give us a call at Malhotra & Assoc and we can discuss your coverage options further: 1-800-945-1410.
