A quick guide to Full coverage insurance


The misconception 

Full coverage auto insurance has been around for a long time now, but people still don’t understand it. Fill coverage insurance doesn’t cover any damage that can happen to your car and it most certainly isn’t PLPD – Public Liability and Property Protection. It is truly astounding that even though full coverage insurance has been around for so long a majority of people don’t understand it; the common misconception is that it will cover for any damages that can happen to your vehicle. 

The name might be misleading but as a consumer it is in your best interest that you evaluate what full coverage insurance means to you and what protection you receive from a plan like this; the onus of understanding your cover and protection is yours and no insurance company will bear this burden for you and explain it to you, its in their best interest that you get it and that is mandated by law thus easing their worry on the subject. 

PLPD – Public Liability and Property Protection is completely different and should not be mixed up with full coverage insurance. Public Liability and Property Protection will only protect the other person from bodily harm and property damage if the third party is involved in an accident with you which was your fault. PLDP will pay for their losses and not yours. 

Why is it recommended by auto insurance companies? 

You car is a collateral to your auto loan you have from a financial lender, that is to say that if you cant or don’t make your monthly payments towards the amount you owe them your car will be re-possessed by them to cover up for their investment; the car is then sold by the insurance company and the money derived is put in towards what your monthly payments would have contributed to the financial lenders earnings. 

Since an auto loan is a secured loan there must be a collateral which the bank or financial institution can re-possess if you default on your payment plan. The obvious choice as collateral in an auto loan is the car in itself; the auto insurance company can always sell it as a used vehicle and recover a part of the loss they have incurred if not the whole amount. 

The higher the value of the collateral falls, the higher the risk for a finance company as they stand to gain a significantly smaller amount when they sell the vehicle upon repossession. Thus the introduction of the mandate for the customer to buy full coverage protection came into play. 

What full coverage auto insurance covers and what it does not 

Full coverage auto insurance covers repairs that must be done to your car, and not repairs like new tires and burned out piston rings. 

It is in the companies’ interests to pay for damages to the car which will keep it in a sellable condition; should you not be able to make your payments as per your payment plan. Insurance companies need to be cynical to survive and must ensure that their best interests are covered and protected before yours. Expenses like a torn tire or burned piston rings and a blown transmission are not of interest to the financial organizations and hence not covered. You cant use a car without transmission or a car with no compression which has had its rings burned out; its only logical to assume that you as the owner of the motor vehicle will take care of such damage and pay for it yourself.