‘Full coverage auto insurance’ is a term you often hear – and yet it does not officially exist in the auto insurance lexicon.
However what it is generally understood to mean is a policy that covers these three basic elements:
State-required liability or no-fault insurance coverage:
Every state requires its motorists to carry at least a minimum level of auto insurance coverage so they can meet their financial liabilities to other drivers, passengers and property owners in the event they cause an automobile accident. This covers both the actual damage to vehicles and property plus medical expenses arising from any injuries.
In addition, there are 12 states that require drivers to purchase no fault insurance.
In these states, each driver receives compensation from their own insurer, regardless of which party was at fault – unless the injuries are serious enough to be an exception.
Although most states insist on you buying insurance that will cover your liabilities to others in the event of a crash, they don’t all require you to have insurance that will pay for repairing the damage to your own vehicle, or you, in the case of an accident.
Nevertheless, this certainly needs to be part of any ‘Full coverage insurance’ package otherwise it could start you on the slippery slope to financial disaster, for example, if your car was damaged beyond repair and you cannot afford to buy a new one and so could no longer get to work.
This is to compensate you in the event you car is stolen vandalized or suffers damage that did not arise from a collision.
You might be puzzled by the set of three numbers on your Auto Insurance policy document, such as: 20/40/10.
These signify the limits of liability the insurance company has to you to pay compensation.
So the first number (20) represents the $20,000 the insurer will pay for bodily injury caused by you to someone else as result of a motor accident.
The number 40 represents $40,000 which is the total sum the insurers will pay if you injure more than one person as a result of your actions.
And finally, the 10 represents $10,000 available to cover damage to property.
That is an auto insurance policy at its most basic, but to be certain you are properly covered, you need all these following elements in your policy.
Property damage cover: This covers the liability that would arise if you caused an accident to either another party’s car or someone else’s property (for example, if you hit someone’s wall as a result of the collision).
Bodily injury cover: This would generally be part of the minimum cover required by most states liability and would take care of any injuries you inflict on other people as a result of you causing an accident. This needs to be without limits as medical expenses can quickly sky-rocket and if the policy is limited you might become liable for the balance.
Medical expenses: This will cover taking care of any injuries you sustain, regardless of who is to blame.
Collision cover: This pays to fix the damage inflicted on your vehicle.
Comprehensive Cover: This pays for all other damage to your vehicle that might not be caused by a collision with another car, such as vandalism and theft and damage by fire, hail and damage caused by you hitting an animal on the highway.
Uninsured drivers: This will cover your costs in the event you are in collision with a driver who turns out not to have any auto insurance.
Under-insured drivers: If you are involved in an accident with another driver who is at fault and they turn out to have insufficient insurance to cover the entire loss, this insurance will kick in and make up the deficit.
You would be wise, whatever level of auto insurance you buy, to spend a little extra and buy some Accident Forgiveness insurance. This will not cost a great deal and will be worth every cent, because – in the event of you having an accident that is your fault – your premiums won’t subsequently be increased as a result.
The surefire way to know you have all the protection your particular circumstances demand is to employ a qualified insurance broker, then you can enjoy peace of mind knowing you are properly covered.
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