Before you even purchase a full coverage car insurance policy, you should ask yourself the question “Am I completely covered?” A lot of car owners may find the term “full coverage” appealing since they think their vehicle will be completely covered in every situation. In reality, all auto insurance coverage policies do have certain limitations, even ones advertised as “full coverage.” A full coverage policy basically includes liability insurance coverage for an insured vehicle, offered as a single package, as well as comprehensive and collision policy.
Generally, the liability insurance coverage limits of your full coverage car insurance are easy to understand. The liability limits are clear and particular, and are usually specified in three parts as follow:
- The highest amount a car insurance company will cover per person for all medical injuries caused by the negligent party.
- The highest amount a car insurance company will cover per accident, meaning payouts for multiple claims.
- The complete amount of any damage to property per accident.
A policy holder is given the right to change these liability limits based on his or her needed coverage. Since most companies only provide minimal coverage limitations, make sure to select a good car insurance provider or company that offers the best options on your preferred coverage. An insurance company will be willing to provide coverage only on the agreed amount.
If you decide to have a lower limit with just partial coverage, you are more susceptible to greater financial hassles in the future. If you cause injury or damage that goes past the coverage limits indicated by your provider, you have to pay the amount that is not covered out of your own pocket. Thus, it is wiser to always select a higher coverage or full coverage car insurance policy.
The part about comprehensive and collision coverage of the full coverage car insurance policy is a bit difficult to understand. However, basically, it goes something like this: in case of an auto collision, your insurance provider only pays your car’s “cash value” and not the full amount you spent to buy it. Auto insurance providers need to comply with certain rules and regulations. When paying property damage claims, providers base their pay on a vehicle’s “blue book value” and not its retail value.
A new car’s value automatically depreciates by thousands of dollars as soon as it drives out of a dealership and hits the streets, giving you more reasons to learn how auto insurance companies estimate the value of your car.