The insurance industry is full of specific terminology that is often confusing to most policyholders. If you're in the market for car insurance, for example, you may have heard of full coverage auto insurance, but you might not really understand what that means. Since full coverage is typically required by lenders who finance your car loan, it's important to understand it before you buy a policy. Here are some of the things that you should understand about full coverage auto insurance.
What constitutes full coverage?
Full coverage auto insurance is a phrase that refers to policies including liability, comprehensive, collision, bodily injury, and uninsured motorists coverage. In most cases, there are no specific limits for those coverage lines to be considered full coverage, you only need to have all of them on your policy.
Liability coverage pays for injuries to other people, damage to their vehicles, and damage inflicted on someone else's property. Comprehensive coverage includes things like broken windshields and other damage that occurred when the car was not being driven. Fire damage, hail, and similar issues fall under comprehensive coverage.
Collision coverage pays to repair your car if you are in an accident. This is typically the coverage used for single-car accidents, such as if you run your car off the road and into a pole or if you strike an animal on the road. Both comprehensive and collision coverage have deductibles, though your choice of deductible does not affect your full coverage qualification.
Bodily injury and uninsured motorists coverage will pay for injuries that you or your passengers sustain in an accident, particularly if the other driver was uninsured or underinsured. This is important coverage to protect yourself from significant expenses.
Are there other coverage options available?
The term "full coverage" gives the impression that those coverage lines are all that is available, though that isn't actually the case. In addition to the standard full coverage, you can also add coverage for things such as rental cars, roadside assistance, and gap coverage. The additional coverage options available will vary with each insurance carrier, so ask your agent about the choices that you might have.
These are some of the key facts that every car owner should understand about full coverage insurance, especially if you are planning to finance your car with an auto loan provider. The more you know about full coverage policies, the easier it is to ensure adequate coverage for your lender's requirements.