You’ve probably heard the term “full coverage auto insurance”. If you have financed a vehicle, the finance company will require you to have full coverage insurance. What exactly does that mean? You may be surprised to hear that there isn’t exactly a full coverage policy. Full coverage is a combination of solid protection coverage for you and your vehicle. When you tell your insurance agent that you need full coverage, there are a few things that they will put together for you. Let’s take a look at what it all means.
Your state requires that you have a minimum of liability coverage. This is to protect both parties. The two types of liability coverage are bodily injury and property damage.
Bodily injury will covers medical expenses for another person, if you cause the accident. This will also protect you, if you are sued.
Property damage covers damage to someone else’s property, if you cause the accident. This coverage takes care of another vehicle if you cause the accident. This does not cover your vehicle, collision covers that.
Some states require uninsured or underinsured coverage which covers cover your medical expenses. Medical payment coverage and personal injury coverage covers yours and your passengers medical payments up to the maximum limit.
Collision coverage is required, by the finance company, if you have financed your vehicle. Why? Because this is what covers your vehicle if damaged. This coverage pays for repair or replacement. Again, there are limitations.
Comprehensive is another type of coverage that finance companies require. Imagine a deer jumps in front of your vehicle and you hit it. There isn’t anyone else in that situation that can pay for the expenses, except for you and your insurance company. Damage from hitting a deer can be expensive. You comprehensive insurance will cover this. Also, under this coverage is vandalism, theft, and weather related damage, like hail.
Rental vehicle reimbursement pays up to a limit per day, for you to have a rental vehicle, while your vehicle is being repaired or replaced.
Having coverage does not mean that your insurance company will cover all of the cost associated with the accident. There are maximum limits that your insurance will cover. This is important to speak with your insurance agent to go over what your maximum limits are. Remember, your state requires minimum coverage, you may want to increase that coverage.
These have deductible which you have to pay. Common deductible are $500 or $1000, meaning you pay that portion and the insurance company pays the rest, based on the limits of your policy.
Speak to your agent about what type of coverage you can have with your budget. You may be able to play around with the deductible to get the coverage you want with the budget that you have.