If you are still paying your vehicle off, you probably won’t have a choice in the type of auto insurance you carry. Most lenders insist that full coverage is carried on the car until the loan is paid so that if you get into an accident, regardless of who caused it, your lender is assured it will get its money. If, however, you own the vehicle outright, you can decide whether to carry full coverage or stick with liability only. Knowing the differences between the two will help you make the right choice for you.
Liability Coverage and Directgeneral.com
Some form of liability coverage is required by law in every state. Liability coverage is designed to take care of those you injure and property that you damage when you cause an accident. Whether you run a stop sign and collide with a moving car, hit a building and take out its wall or ram into a parked car on a snowy street, your liability insurance policy is there to take care of the damage. The policy will pay for damages up to the limits you set when you purchased the coverage.
Every liability policy has limits on medical payments, property damage and other incidentals. If the damages are deemed to be higher than those limits, you can be held personally responsible to pay them. An example of liability coverage would be $10,000/$50,000 for medical coverage and $15,000/$60,000 for property damage. This means that the insurance company will pay up to $10,000 for medical treatment for each person injured, to a total of $50,000 for the entire accident. In addition, it will pay up to $15,000 for each property damage claim or $60,000 for all property damage claims combined. Directgeneral.com can help you decide how high to set the coverage limits on your policy. Liability only coverage does not pay to repair your vehicle if you cause the accident, though many policies have an option to add coverage to pay your medical bills if you are injured.
Full Coverage and Directgeneral.com
Full coverage insurance, is exactly what it sounds like. It provides all of the basic liability coverages and then adds collision and comprehensive coverages to the policy. Comprehensive coverage will pay for damages that are not the result of an accident. Examples of things covered by comprehensive coverage include damage by a hailstorm, a tree falling on the car and damage caused by vandalism. As long as you are not at fault for the damages, your policy pays.
Collision coverage is also part of a full coverage policy. Collision coverage pays for repairs to your vehicle when it is in an accident that was your fault. In most cases, if the accident was not your fault, the insurance company for the person who caused the accident will pay for your vehicle repairs. In some cases, however, your company will pay and then require the other driver’s insurance company to reimburse it for damages.
Regardless whether you choose full coverage or liability only, you will also have the option of adding coverage for uninsured motorist and under-insured motorist. This coverage option pays for damages to your vehicle if you are in an accident caused by an uninsured or under-insured motorist.
Factors to consider when deciding whether to purchase liability only or full coverage insurance include whether you can afford to replace the vehicle if needed, how much you can afford in premiums and the age of the vehicle. (Some companies have limits on how old of a car they will place full coverage on).