Full Coverage And insurance Guide

Variation Between Full Coverage and Liability Insurance

Auto insurance involves many types of coverage and it is quite simple to get confused. It is so important to know the differences between the various types of coverage so you don’t end up either paying more than required in insurance premium or get a car insurance policy that does not provide adequate cover.

The 2 main types of coverage you need to know about are full coverage and liability insurance. Both are at the extreme ends of a auto insurance policy.
Much of what pertains to auto insurance is state controlled. The state lays down the primary guidelines and requirements. The lower amount of coverage required as per state law is known as liability auto insurance.
Liability Insurance Coverage

Liability auto insurance covers the damages and injuries to other people and their property when you are responsible for an accident. Liability auto insurance consists of three basic parts.

It is normally denoted as x/y/z where “x” stands for Maximum Coverage limit for bodily injuries per person per accident, “y” stands for extreme Coverage limit for all bodily injuries sustained by all people per accident and “z” stands for Maximum property damage coverage per accident. For instance, 25/50/10. More specified details are available on State auto insurance requirements.

The specifications of liability coverage change as per state. You need to purchase a auto insurance policy that complies with the liability coverage guidelines of your state. It is recommended that you purchase more than the minimum limits to ensure that you have adequate coverage or else you may end up with massive bills. You can add other coverage to this basic plan.

Full Insurance Coverage

Full coverage is a misleading term. It does not cover “everything”. Full coverage includes 2 more types of coverage in addition to the basic liability insurance coverage. These 2 additional types of coverage are:

Collision Coverage: It covers your vehicle against collision with any stationary or moving object (other than a car).
Comprehensive Coverage: It deals with deteriorate caused by natural disasters (flood, hail, storm), theft and vandalism.

You can buy liability coverage and comprehensive coverage without purchasing collision coverage. But you can not buy collision coverage without choosing for liability and comprehensive coverage.

If you are paying a vehicle loan, it becomes mandatory to buy collision coverage along with the comprehensive one. This helps auto insurance companies because if your vehicle is totaled during an accident, the auto market value is paid off using the insurance money. Anyway, the difference between the market value and the auto loan amount needs to come from a Gap insurance coverage or your particular finances.

Collision and comprehensive coverage are not involuntary. Assess your needs and purchase a car insurance plan as per your needs.