Defining "full coverage" auto insurance

on June 21, 2011 & Posted in Auto Insurance

The term "full coverage auto insurance" means different things to different people. For some, full coverage refers to a policy with all of the bells and whistles, while others want the cheapest car insurance they can find.

A full coverage policy doesn't have anyone definition - it isn't one-size-fits-all. Instead, it is auto insurance that provides you with the financial protection you need.

State-mandated auto insurance requirements

Liability auto insurance pays for damage you cause to others - both property damage and bodily injury. Every state, with the exception of New Hampshire, has state-mandated liability limits but these limits are typically too low to provide adequate financial protection.

A policy with only the legally required auto insurance coverage is generally insufficient. In order to ensure you have the proper financial safety net in place, to protect assets such as your home and savings, the Insurance Information Institute recommends purchasing liability protection beyond the state-required minimums.

Extra auto insurance coverage

Many people, particularly those who have financed or leased their vehicles, carry collision and comprehensive insurance along with liability. Collision insurance pays for the damage to your car caused in a traffic accident. Comprehensive coverage, on the other hand, pays for damage to your vehicle caused by other mishaps, such as theft, natural disasters or collisions with an animal.

Both collision and comprehensive insurance typically feature a deductible, which is the portion of a loss you are financially responsible for paying. Depending on your policy, your auto insurance deductible could be $250 or $1,000.

If you need collision and comprehensive insurance, you should set your deductible at a level you can comfortably pay. After all, full coverage auto insurance provides you with the right amount of financial protection. So if you can't afford to meet your deductible after your car has been in an accident, you haven't purchased auto insurance that meets your needs.

Other car insurance policy extras include roadside assistance, gap insurance, rental car reimbursement and uninsured motorist coverage. However, just because your policy features all possible add-ons, doesn't necessarily mean you have full coverage auto insurance--in fact, you may have too much coverage. For example, if you have access to multiple vehicles, you may not need rental car reimbursement.

Full coverage can mean many different things. Instead of relying on a catch-all phrase, the best way to insure yourself is to determine what full coverage auto insurance means for you and buy the level of coverage you need.


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