When you're shopping for car insurance, the auto insurance options you will have to choose from will depend on whether you're still making payments on your vehicle and the state in which you live. However, there are three basic auto insurance options:
- Full Coverage Insurance;
- Comprehensive and Collision Insurance; and
- Liability Insurance.
Full Coverage Insurance
When you are buying a new or used vehicle from a dealer, the lender will ask that you carry full coverage insurance on the vehicle. This allows them to recoup some of their losses if the vehicle is in an accident and deemed beyond repair, destroyed in a natural disaster, in a fire or stolen. In most cases, you have to have full coverage on a vehicle you're paying for until the loan has been satisfied or the lien on it is released.
What is Full Coverage Insurance?
A "full coverage" auto insurance policy is actually several policies rolled into one in order to make sure your vehicle is covered for damages or for its full value if it totaled. Most full coverage policies include:
- Your state's liability or no-fault insurance;
- Collision insurance; and
- Comprehensive insurance.
The liability or no-fault insurance will cover bodily injury and property damage for other people involved in an accident that you caused. The collision insurance coverage pays for damage done to your vehicle in an accident and comprehensive insurance covers damages to your vehicle caused by theft, vandalism or other non-accidental causes.
Some people will have other coverage rolled into their full coverage insurance policy to help offset costs when their vehicle is damaged. These auto insurance options for a full coverage policy may include:
Uninsured or Underinsured Motorist Protection - This option will help cover your damages if you are hit by someone who doesn't have an auto insurance policy or whose policy has insufficient coverage and/or coverage limits.
Personal Injury Protection - This will help cover your medical bills after you've had an accident, even if you were found at fault for it.
Rental Reimbursement - This is one of the auto insurance options that will help pay for expenses when your car needs to be repaired after an accident. This will allow you to rent a car while yours is in the shop.
Gap Insurance - This coverage will help pay the amount between what you still owe on your car and its cash value if it was totaled in an accident.
Depending on what model of car or truck you own, you may wish to keep full coverage on your vehicle after it has been paid off. It will depend on whether you can afford to pay for the items these auto insurance options cover, where you live and your budget.
Comprehensive and Collision Insurance
Once your car has been paid off and the lien is released, you may opt to lower the coverage on your vehicle to something more affordable. Even though the various auto insurance options will make it easier to help pay for repairs and medical expenses, you may decide you don't need the extra coverage. Instead of having a full coverage policy, you may step down so you only have comprehensive and collision insurance.
Most insurance companies offer comprehensive and collision insurance as one policy and you may not be able to buy one without the other. The value of your car will help determine whether you should purchase comprehensive and collision insurance or just liability insurance. If you have a newer, more expensive vehicle, you may want to purchase comprehensive and collision insurance to help cover expenses if your vehicle is damaged in an accident.
When you get into an accident, this coverage will help pay for the repairs on your vehicle or will cover the replacement costs if your car or truck is totaled. It covers these costs if you have an accident involving another car, crash into an object or if you have a rollover accident.
Although most insurance companies do not offer it with their auto insurance options, some companies will cover your pet's medical expenses if they were in the car with you and sustained injuries. However, this coverage is usually limited and may not be enough to pay for all of their vet bills.
This auto coverage helps pay to repair or replace your car if it was damaged in a non-accidental incident. The covered incidents include:
- Falling Objects;
- Natural Disasters; and
- Damage due to hitting animals in the road.
Glass repair or replacement is often covered by most comprehensive insurance policies. Some companies will even waive your insurance deductible on small repairs to your windshield, but each policy is different and you should check to see what is covered by the comprehensive policy you're being offered on your vehicle.
Out of all the auto insurance options, this is the minimum coverage you are required to have in order to own and operate a car or truck. Liability insurance covers the cost of an accident determined to be your fault. The two parts of liability coverage are:
- Bodily Injury; and
- Property Damage.
Bodily Injury Coverage
Auto insurance options that include this coverage help pay for the medical expenses of another party injured in an accident you caused. Along with medical expenses, many policies also cover funeral expenses, long-term nursing care, loss of income due to the accident, and pain and suffering. The payment for pain and suffering is usually determined in a court of law.
Property Damage Coverage
This helps to pay for the damage to the other party's property, which is usually their vehicle, in an accident for which you were found to be at fault. If the accident also caused damage to their home or another part of their property, it would also be covered by your liability insurance.
Since there are monetary limits to what your insurance policy covers, you should always review the auto insurance options on your policy and get adequate coverage to avoid potential lawsuits.