Full Coverage Auto Insurance Explained

June 2, 2016

Understand the difference between full coverage auto insurance and comprehensive coverage. Learn how to find cheap full coverage car insurance.

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When insuring your vehicle, there are dozens of options you need to go through before finally making a buying decision. One such decision is whether you want comprehensive and collision coverage, often nicknamed “full-coverage insurance,” or just liability.

Liability insurance is typically the least a state will allow you to drive with. and it only covers damages and injuries to other people or their property if you get in an accident. Full-coverage insurance, on the other hand, covers damages to your car and your own injuries. Additionally, the comprehensive side of a full-coverage policy protects your car in the event of non-collision-related damages (e.g. from natural disasters, hail, animals or tree branches).

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True Full-Coverage Car Insurance

As we mentioned earlier, true “full-coverage insurance” doesn’t actually exist, but it is a term that insurance agents are familiar with. This term typically means the combination of comprehensive and collision coverage on a policy, so that regardless of the accident you’re in, your car will get fixed. Comprehensive and collision coverage are typically the two of the biggest premium costs in the world of insurance because they significantly increase the risk of loss for insurance companies. Often, new-car buyers are forced into these pricey policies by their loan company, but we’ll dive a little deeper into that further down.

Is Full Coverage Auto Insurance Required or Just Recommended?

In most states, full-coverage auto insurance is recommended, but not required. The only time the word “required” starts getting tossed around is when there is an outstanding loan or lease on the vehicle as these companies often require these policies to protect their asset (i.e. your car).

A full-coverage policy can also help protect your paid-off car too. It helps here by guaranteeing that you will receive a check for the actual cash value of your car if you were at fault for a crash or happened to clip a deer and do enough damage to exceed the car’s value. You can use this cash to help get a replacement vehicle. With just liability insurance, you would be out a car, period. Sure, it’ll cover the other driver in a two-car wreck, but you are out of luck.

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If your vehicle has an outstanding balance on a loan or lease, your finance company will likely require you to carry full-coverage insurance with the minimum coverages noted in your finance agreement or lease. Full-coverage insurance is required in this case because the finance company does not want damage to go unrepaired, nor does it want to face the prospect of repossessing a vehicle with thousands of dollars’ worth of damage that’ll likely sell for peanuts at auction and result in the finance company just writing it off.

If your finance company finds out that you lack adequate insurance coverage, it won’t be shy about force placing insurance that meets its requirements. You may think that force-placed insurance means you’re off the hook for car insurance altogether, but these policies are often very expensive, and the lender will add their cost to your car payment.

If you are in a pinch and need to find cheap full-coverage insurance to keep yourself legal or in your finance company’s good graces, you can use the tools available at www.CarsDirect.com to get competitive local quotes.

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