Basics of Full Coverage Auto Insurance

by Redeeming Riches on July 12, 2012

Full coverage auto insurance is an industry term used for coverage protection against physical damages to your vehicle and generally the insurance policy includes liability for collision and comprehensive incidents. The reason most drivers carry full coverage insurance is to repair damages or cover the cost of replacement for a vehicle. If you are shopping for full coverage insurance, understand the name “full” is a tem used to describe insurance options, which include various levels of vehicle insurance coverage. Some options are selective by the policy holder and other mandated by title or lien holders.

Comprehensive insurance pays for vehicle damages, which are not caused by collision, such as acts of nature; storms where objects are thrown against the vehicle or falling debris hits the vehicle, while traveling the roadways. Collision insurance covers damages to your vehicle as a result of another vehicle hitting it or the vehicle is involved in an accident. Insurance companies rarely sell one without the other, as these are intended to protect your vehicle from all types of damage. States mandate minimum insurance coverage for two type of liabilities, which are included within a full coverage insurance policy; bodily injury to someone as a result of an accident involving your vehicle or if your vehicle caused damage to another party’s property.

Depending on the state you claim as residence, full coverage insurance will include the state’s required liability minimums with comprehensive and collision. The state and your place of residence will make a difference in the insurance policy requirements and cost. If the state enforces an at-fault drivers law, your insurance pays for all damages, if the accident is the other driver’s responsibility. States, which operate on a no-fault system, will hold each driver responsible for their own vehicle damage no matter who’s at fault for the accident. In either case, policies owners are responsible for the paying the deductible, which is subtracted from the total cost of repairs to the damaged vehicle.

If your vehicle is financed or leased, full coverage insurance is usually required as proof of insurance. Full coverage usually covers the vehicle’s loan amount, should the vehicle be involved in an accident and damages extend beyond repair or what is termed in the industry as totaled. If the vehicle is stolen and not recovered, full coverage insurance may cover the loan amount and reduce the out-of-pocket amount to the policy holder. The amount issued to the policy holder is based on the vehicle’s actual cash value or market value, less the policy’s deduction amount. If the lender is holding the vehicle’s title, the payment will be forwarded to settle the balance of the vehicle loan. Vehicles, which are completely owned, and without a lien holder may still want to consider full coverage. If the vehicle’s overall value is higher that 10% of the full coverage insurance premium cost, it may be well worth the vehicle’s protection and your peace of mind.

Another great resource are auto insurance calculators.  Auto insurance calculators can help you make a final decision on what type of car insurance you need.  One site I like is carinsurancecalculatoronline.com.  This site is great because you can check out a full coverage auto insurance quotes in a fast and simple manner.

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