When you are Shopping for car insurance and the car is new or you are making payments on it, and especially if the car is on a lease, you will required to obtain full coverage on it. This protects your interests in the car as well as the interests of the title holder, who would be your car loan company. But the term “full coverage” has various different meanings depending on your insurance company, so be sure that you and your insurancecy company are discussing “full coverage”, you are both on the same page as far as the meaning of the term.
First of all, full coverage does not mean that you do not have to pay your deductible. You have a deductible amount for your various different car insurance coverages, and it may be a different deductible amount for each type of coverage. For example, you may have $500 deductible on collision and $1000 deductible on theft. But if either of those two things happens, you still need to pay the deductible amount, and the insurancecy coverage does not kick in until the amount of damage or loss exceeds your deductible amount.
You need to understand that you are not covered for EVERYTHING that could possibly happen to your car. For example, if you get a flat tire, that is not covered by your car insurance. Tires are known as a “consumable” which means that it is expected that these will wear out and need replacement at some point.
You may absolutely love your car and feel that there is no other like it on the face of the planet. But if you are in an accident, be aware that the insurance company needs to make a choice at this point and will almost certainly choose the cheaper option – is it cheaper to repair the damage on the car, or to declare it totaled and pay you for the fair market value of it, minus of course your deductible? You do not have a choice in the matter, regardless of how much love you had for the car, it is the insurance company’s decision.
On your car insurancecy liability coverage, it will cover you for injury to other people and property damage caused by an accident. But this coverage is not without limits. When you purchased your car insurance policy, you were told what limits would be placed on each type of coverage, and when that limit is reached, then the insurance company stops paying, and you may be personal liable. Be aware of the limits of coverage that your car insurancecy has to avoid this potential, but weigh this against the increased cost of the car insurance policy with the higher limits, and decide what is best for you. For example, if you totally wreck a Rolls Royce Silver Cloud that someone else is driving, chances are very good that your insurance company is not going to pay for replacement costs of that unique vehicle, which could run into 7 figures.
You need to consider what is reasonable for the type of driving you do and where you drive, and set the limitations and deductibles accordingly. A car insurance policy can be written in almost an infinite number of ways, but you get your best rates by factoring in the most logical coverages for you. And be aware that “full coverage” still has limitations, despite its name.
