There is no one-size-fits-all car insurance policy. Despite its name, full coverage car insurance doesn’t cover every type of accident or incident. In fact, full coverage car insurance is a bit of a misnomer, as there is no single full coverage car insurance policy you can buy.
If you see anyone advertising full coverage car insurance, it’s likely that the coverage is a package deal made up of several comprehensive, collision, and liability policies that you can tailor to your needs. It’s important to know the differences in these policies so you can choose the right types and amount of coverage for you.
Types of Car Insurance
There are three basic types of car insurance policies that, when combined, offer you “full coverage.” That is, they cover you for almost every scenario you’re likely to encounter with your car. Those three types of policies are collision, comprehensive, and liability.
All states require at least some level of state-mandated car insurance coverage. The types of coverage and the minimum amount each policy covers vary by state. These laws are mainly designed to cover those you injure and property you damage if you cause an accident or are considered at-fault in a collision. You can learn more by reading our guide on how car insurance works.
If you’re involved in an accident and your vehicle must be repaired or replaced, collision insurance covers that, minus your deductible, up to the dollar amount as spelled out by your insurance policy.
With collision coverage, you don’t get to dictate if your car is repaired or replaced. You may prefer to have your car repaired instead of replaced, but your auto insurance company may decide that it costs less for them to cut a check for the value of the vehicle. Policyholders can argue with the insurance company for repairs, but they do not have the final say.
The cost of collision insurance varies greatly. You will need to decide how much cash you want to be responsible for forking over in the event of a claim. The amount you’re responsible for paying is your deductible. If you choose a $1,000 limit, you are responsible for all costs under $1,000. If you’re in an accident that causes $12,000 worth of damage, you will pay $1,000 and your insurance company will pay $11,000.
You will always pay your deductible before the insurance company ponies up a cent. You’ll frequently hear this referred to as, “the first $1,000” or “the first $250.” A policy with a high deductible generally costs less per month than a policy with a low deductible because you are assuming more risk. That said, if you have an accident and you have a high deductible, you’ll need to have cash on hand to pay it, which means that lower monthly payment may not be worth it.
You can reduce your collision insurance costs by driving an inexpensive car or one that is cheap to repair. Because that lowers the amount the insurance company would need to pay, it lowers the price of your collision policy.
A clean driving record will also help keep your collision insurance costs down. Your insurance company will see that you’re less likely to have an accident than a driver with lots of accidents or speeding tickets on their record. With a lower accident risk, and a smaller chance that they’ll have to pay for repeated repairs to your car, your insurance company will charge you less for collision coverage. See more about collision car insurance and car insurance discounts.
Having a comprehensive coverage policy ensures that your vehicle is covered in the event of an incident unrelated to a collision. This type of policy covers such things as hail damage, vandalism, and theft.
If you live in an area with frequent hurricanes or flooding you’ll want to check with your insurance provider to see if your policy covers these types of natural disasters. Some insurance companies make exceptions for coverage in certain designated disaster zones. For them, the risk of paying out in the event of a disaster is too high. Consequently, when there are fewer providers for a market like that, the cost of coverage can be higher than it traditionally would because there’s less competition for business.
Like collision insurance, you can lower your cost for comprehensive insurance by owning a car that’s cheap to repair or replace. You can also get a better rate by keeping your car in a garage, as opposed to parking it on the street. See more about comprehensive car insurance and car insurance discounts.
If you cause an accident and damage another person’s property, liability car insurance will cover the cost to repair or replace it. For example, if you’re texting and driving and you drive into someone’s fence, liability insurance will pay for repairing or replacing the fence. A liability policy does not cover you, your property, or other persons that may be in your vehicle at the time of the collision. Like collision and comprehensive car insurance, liability car insurance comes with a deductible and limits on how much your car insurance company will pay out.
Liability insurance can be subdivided into two categories: bodily injury liability and property damage liability. If you cause an accident that results in physical injuries to someone outside your vehicle (another driver, a pedestrian, or a bystander), bodily injury liability insurance covers costs related to those injuries. If you rear-end another vehicle, and the driver of that vehicle has to go to the hospital, this type of insurance covers the cost of that treatment, minus your deductible, up to the limit predetermined by your policy. This type of insurance does not cover injuries to you as the driver or your passengers.
Property damage liability covers the costs of repairing or replacing property that’s damaged as the result of a collision that’s your fault. If you drive into a fence, property damage liability insurance would pay to repair or replace the fence, minus the cost of your deductible, up to the limit as stated in your insurance policy. This type of policy does not cover damage to your vehicle or property.
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For full coverage car insurance contact the Farnsworth Agency today by calling us at (541) 318-8835 or click here to connect with us online.