What Is 'Full Coverage'?
People often talk about having their cars "fully insured." But for those who don't really know the ins and outs of auto insurance terminology, exactly what does that mean and what type of coverages should they consider?
While there are many auto insurance options you can choose, there's really no such thing as "full coverage" for your car.
The good news is that there are a lot of things you can do to make sure you have auto insurance that fits your needs and helps to protect you against a variety of perils that can cause losses. If you are conscientious and want to make sure you have all the types of coverage that are available, here is a list of several of the common auto coverages you may want to consider:
Liability coverage is typically included in all insurance policies, and it protects you from damage you cause to others or to property as a result of an accident for which you are at fault. Typically, the liability coverage in an auto insurance policy will contain three limits: the maximum payment for bodily injury per person, the maximum payable for bodily injury per accident and the maximum payable for property damage.
As you probably already know, if you're buying insurance, all states require some level of liability coverage. To find out what the auto insurance requirements are in your state, check out this comprehensive list of state coverage requirements.
Someone who is looking to obtain auto insurance coverage for their vehicle may want to go beyond the state requirements and buy a policy with higher liability limits. This may increase your premiums, but it will also give you greater coverage in the event of an accident.
Comprehensive and Collision Coverage
Collision coverage and comprehensive coverage are two optional types of coverage on your insurance policy, although if you are still paying off an auto loan or if you have a lease on your vehicle, your lien holder or financing company almost always requires these coverages.
Collision coverage typically pays for damage to your vehicle if it is involved in a collision with another vehicle or if it hits an object. It's different from liability coverage, which typically relates to damage to property belonging to another party involved in an accident you caused or bodily injury to another person.
Comprehensive coverage protects you against losses caused by covered perils not related to a collision. These perils often include storms and natural disasters, such as a hurricane or a tornado, vandalism, theft, falling objects, animal damage or a broken window, but you should check with your agent to make sure what is included in your specific policy.
If your goal is to pay as little out of pocket as possible in the event of a claim, then you may want to consider lowering your deductible. This will raise your insurance premiums, but you will have the peace of mind of knowing that you won't have to pay a high deductible to repair or replace your car in the event of a covered loss.
Uninsured and Underinsured Motorist Coverage
Another option is to take out uninsured and underinsured motorist coverage. If you're in an accident and the other driver is deemed at fault, that driver's liability insurance will usually cover the damage to your car—unless that driver doesn't have car insurance. In that case, in some states, your collision coverage could pay for the damage to your car. If you don't live in one of those states, however, you may opt to get uninsured motorist coverage so that if you end up in a situation like this, it will pay for the damage to your vehicle.
Underinsured motorist coverage takes effect if the other driver has insurance, but its limits are not high enough to cover the damage to your vehicle or to cover injuries from the accident.
Medical Payments Coverage
Medical payments coverage is an optional coverage that offers protection in various scenarios, which may include an accident that happens when you are in your own vehicle, an accident that happens when you are in someone else's vehicle or an accident in which you are walking and are hit by a car. It can also cover any passengers in your vehicle or any family members who are driving the insured vehicle at the time of the accident. Click here for information on what medical payments coverage typically covers.
One thing to take into consideration if you're buying medical payments coverage is the limit, which can vary. If you're looking to get the best coverage possible, you can get a higher limit—sometimes up to $100,000.
Personal Injury Protection
Depending on the state, Personal Injury Protection coverage can help to cover medical expenses resulting from a covered loss, and in some cases, it can also help you pay for other expenses while you're healing. These expenses can include child care services, income continuation, loss of services and even funeral expenses.
As with medical payments coverage, if you're looking to be as covered as possible, you should consider getting Personal Injury Protection with a higher limit.
You may not know this, but Rental Car Reimbursement is not automatically included in most insurance policies. Rental reimbursement coverage can reimburse you for the cost of renting a car while yours is being repaired, under certain limits. You should check with your agent if you're interested in this coverage.
Worried about what would happen if you get stranded on the road? You may want to consider Towing and Labor Costs coverage, which can help reimburse you for towing and other basic expenses from roadside assistance.
Another optional coverage is Sound System coverage. This may be an option you want to consider if you have installed a high-end sound system into your car.
So, now you know that you can choose from a variety of options when buying your auto insurance policy to make sure that you have good coverage in the event that you need to make a claim.
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