While you have probably seen or heard the term “full coverage auto insurance”, there really is no set definition for this term. This means that what one company considers full coverage may not in fact be the same thing as what another company is offering. The term full coverage generally refers to the combination of liability coverage, comprehensive coverage, and collision coverage. There may also be other specialty offerings such as roadside assistance or pet coverage included in certain full coverage packages that are offered by some companies. There is a lot of ambiguity when dealing with the term full coverage and by understanding what you want from a policy will allow you to purchase the appropriate coverage. The easiest way to approach this subject is to break down the different types of insurance policies that are typically a part of “full coverage”.
Liability Coverage: This type of coverage is what will pay for damages that are a direct result of an auto accident that you are deemed to be responsible for. Liability coverage is also required by law in order to register a vehicle and each state has specific requirements as far as coverage limits are concerned. These minimum limits are generally quite low and by no means are an ideal amount of coverage to have. This type of coverage will pay for any damages you cause to another vehicle, other damaged property such as a building, and any bodily injury that is a result of the accident. This will pay for damages up to the specified policy limits for each type of coverage. The coverage limits are usually expressed in the following format 50/100/25, which translates to $50,000 bodily injury per person, $100,000 bodily injury per accident, and $25,000 property damage per accident. This coverage applies to any accident which you are determined to be liable for and the determination will ultimately be made by your insurance company, not the police as some people think is the case.
Comprehensive Coverage: The easiest way to describe this type of coverage is that if your vehicle is not moving and it is damaged, that is when comprehensive coverage kicks in. For example, if your car is parked in your driveway and a tree branch falls on it, comprehensive coverage would pay for the resulting damage. This is considered to be a first party insurance coverage as it is intended to cover the insured party’s assets. There is usually a deductible that the insured party will need to pay which can range from $250 to $1,000 or more. This is generally less expensive than collision coverage as there are fewer incidents of this type.
Collision Coverage: When it comes to collision coverage this generally includes any damages that result from any incident which occurs when your vehicle is in motion. For example, if you are driving your car and run into a light pole in a parking lot, this would be paid for under your collision coverage. This is a first party coverage which also requires the payment of a deductible in the event of a covered accident. The deductible will usually be between $250-$1,000 or more, depending upon the policy. This coverage will pay to have your vehicle repaired or in the event the vehicle is totaled it will pay the actual cash value (ACV) of the vehicle. This is usually determined by the price at which similar model and year vehicles have sold for in your area. There are also some policies which state if your vehicle is less than a year old it will pay the actual cost to buy a new one, instead of paying the ACV which is generally far less.
Buying Full Coverage Auto Insurance: When the time comes to purchase an auto insurance policy you obviously want to look for the best deal. This is a bit tricky because you need to weigh not only the price but also what is offered for that price. You will also want to read reviews of insurance companies to see which ones have high customer satisfaction rates, as these will be the best to work with in the event of an accident. By understanding what is offered by different full coverage auto insurance policies you will be better prepared to get the right policy for your needs.