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Your bank requires a full coverage auto insurance policy for your new car. But what is that? Generally, it’s a combination of coverages (liability, comprehensive, collision) to protect you and your car in an accident or other emergency.
You bought a new car — congratulations! Now your bank says you need a full coverage auto insurance policy to protect it, but what does that mean, exactly? Full coverage auto insurance is a term generally used to describe a combination of coverages (liability, comprehensive, and collision) that protect you and your vehicle in the event of an accident or other emergency.
Full coverage describes multiple types of insurance all combined into one policy designed to protect you and your vehicle. Liability insurance is only one part of a full coverage insurance policy.
Liability insurance is the portion of your coverage that pays for injuries and damages you cause in an at-fault accident. If you hit someone else and they need to repair their car or seek medical attention, your liability coverage is what pays for those expenses.
Liability insurance does not pay for any damage to your own vehicle or any medical expenses you may have if you are in an accident, no matter which driver was responsible for the damage. There are other coverages you can purchase that can help protect you and your vehicle, such as uninsured or underinsured motorist coverage, personal injury protection, or med pay, but they are typically not considered part of your liability coverage.
Goosehead finds the best coverage and cost options to fit your needs.
A declarations page, also sometimes referred to as a “dec page,” is a page from your insurance policy that sums up your policy coverage.
Unlike comprehensive and collision coverage, liability insurance is required by law in almost every state.
Collision coverage is the portion of your full coverage policy that pays for damage to your car when you are at fault in an accident, whether or not that accident involved another vehicle. Collision coverage includes:
Collision coverage isn’t required by law, but banks or other lenders who issue car loans usually require you to carry collision insurance as part of a full coverage policy until your car is paid off.
Comprehensive coverage is the portion of your insurance policy that covers non-accident damages to your car, including:
Comprehensive coverage also includes glass and windshield damage, but many companies have additional deductibles for replacing glass or repairing a windshield, so it is important to work with an insurance expert to make sure you understand your comprehensive coverage and how it applies to glass and windshield claims.
Comprehensive and collision coverage both come with
deductibles, but insurance companies in many states require you to have a separate, lower deductible for glass damage.
Florida, Kentucky, and South Carolina require insurance companies to waive the deductible for windshield damage because driving with a damaged windshield can be dangerous. This is to encourage people to get their windshield repaired right away instead of leaving it damaged.
Insurance companies in some states allow you to “buy down” or “buy back” your glass deductible, which means they allow you to reduce your deductible for glass repairs if they go beyond your comprehensive deductible amount. This is highly dependent on your location, so contact our experts at Goosehead Insurance for more information about your specific coverage.
Full coverage insurance covers at-fault accidents. If you hit another car on the highway or run into a guardrail, your collision coverage will pay for the damages to your vehicle and your liability coverage will pay for the damages you caused in the accident.
The only time full coverage insurance might not pay for damages in an at-fault accident is if the insurance company or the court system determines that the accident was intentional on your part. If you purposely hit someone or something with your car, those damages will not be covered by insurance.
It is tempting to switch to a liability only policy as soon as your car payments are complete, but you should carry full coverage on any vehicle you cannot afford to replace out-of-pocket in the event of a total loss. If the value of your car is high enough that it would be a financial hardship for you to replace it, carrying full coverage is likely your best option.
There are occasions when it makes sense to switch to a liability only policy, such as:
Keep in mind, however, that cancelling full coverage isn’t just about losing coverage in an at-fault accident. It means you aren’t covered for any damage to your own vehicle, so if you find yourself dealing with a car fire or a stolen car you will have to pay for a replacement without the help of your insurance company.
There are several ways to save money on full coverage insurance, including:
The contents of this article are meant as general information to help you understand personal lines insurance and not specific to a particular policy. Policies, coverages and discounts can vary by state and insurance carrier. To understand your coverage, you should speak directly with a licensed insurance agent or read your full policy contract. Call your agent or contact us at (833) 779-4090.
Summer is here, and while it's the season for road trips and beach outings, it's also a time when certain misconceptions about driving can lead to unnecessary risks. To help you stay safe and informed, we've collaborated with insurance experts to debunk five common myths about summer driving. Myth 1: Cars Don't Overheat in Summer Anymore.