No matter how much experience a driver has, or how carefully he or she drives, sooner or later almost everyone will be involved in a car crash, at least in a minor “fender-bender”, with hopefully no-one injured. For those reasons, and for the unfortunate major crashes that happen, we all need car insurance, and preferably cheap car insurance, if we can find it.
How Much Car Insurance is Enough, Anyway?
In order to save money and yet be adequately covered, many people wonder how much insurance is enough, and what exactly is full coverage auto insurance. In the strictest sense of the word, no coverage is “full”, meaning all policies have limitations. Full coverage auto insurance is a term used to cover the most comprehensive coverage usually available within a particular company. As a general rule of thumb, the broad definition of full coverage means meeting the required liability limits in your state, and in addition, having physical damage coverage. There are two parts to physical damage coverage, and they are known as collision coverage and comprehensive coverage.
Auto Insurance and Liability
Not all states require the purchase of car insurance to drive an automobile on the road, but all states require that you show financial responsibility to pay for any damage you cause. States have different minimum requirements for car insurance. Some states will not allow car registration without liability insurance, while in other states a driver needs proof of liability when involved in an accident.
Liability insurance is the minimum basic coverage you can have to drive a car legally. Everyone must have at least liability insurance, or enough personal assets to cover an accident. Unfortunately, some people ignore this law and drive illegally, driving up the cost of insurance for everyone when they cause accidents. Liability covers bodily injury or property damage you may cause to other people. It does not cover you or your car.
Collision Coverage for Your Car
There is usually a deductible involved in collision coverage, and this part of insurance covers the damage to the automobile that results from the owner being at fault in a car crash. The vehicle is covered for whatever repairs it needs, or for total replacement. It also provides coverage for damage caused by an under insured driver, or a driver who has no insurance. In that case, your insurance company will pay for your car, but since you are not not liable, your insurance company is not liable to pay anything for the other driver. Collision protects your vehicle if you are at fault in any damage, or if another driver who has no insurance is at fault.
Comprehensive Coverage for your Automobile
A deductible is included in comprehensive coverage, and this part of insurance covers the car for damage not under the insured’s control. Damage could be from hitting an animal, theft, vandalism, or weather related damage, otherwise known as “acts of God”, such as a tree limb falling on the car. This coverage is also called “other than collision.” If somone steals your car, or vandals damage it in some way, your insurance company will pay for its repair or replacement. Comprehensive protects your vehicle in all instances of damage other than a moving collision with another vehicle, or running off the road into a tree, for instance.
How Much Auto Insurance coverage is enough?
To know how much insurance you need, and to be sure you have full coverage insurance if that is what you want, you need to talk with a licensed insurance agent. You can get a quote for the price by either talking with an agent, or you can receive an online quote by providing certain information on a website. Bear in mind that cheap insurance is not always the best insurance. Be sure you completely understand what will be covered in any package you purchase, compare different coverages and even get quotes from several different companies.
If your car has a lien against it, meaning you still owe the bank money for it, you will need to have enough insurance to cover it in the event of any kind of damage. If a vehicle is “totaled” in a wreck, you still owe the amount left on the loan to your lending agency. If you are about to purchase an auto, you will have to show enough insurance to cover the amount of the loan. This will mean making sure you have full coverage for any damage that might occur to the car.
If a car is a total loss in an accident, insurance companies pay only what the car is worth at the time of the accident, not the price you paid for it, even if the damage occurs the same day you bought it. If you owe money on it, you will be responsible for the balance if it is not fully covered. According to CarInsurance.com, the coverage limit refers to the maximum policy amount that a company will pay for an accident. Have a thorough discussion with a licensed agent to determine exactly what your policy will cover.