Auto Insurance Plans - Liability, Comprehensive, Collision and Full Coverage
Posted: Nov 06, 2013
The two most common terms regarding auto insurance are liability and full coverage. Liability insurance is the required state minimum for drivers, while full coverage is a combination of liability, comprehensive and/or collision insurance coverage. There is no actual insurance product named full coverage insurance, but it has become the most recognizable term for this type of plan.
To get the plan that suits you best, you need to know what you want. While liability pays up to a certain amount for damage that you are at fault for in an accident, comprehensive can be a combination of different policies. And some plan features won't be made available to you unless you request them specifically, so it's best to be informed ahead of time.
The minimum liability insurance required varies by state, because car insurance is regulated at the state level. The minimum required is written in three parts. For example, in Pennsylvania the minimum requirement is 15/30/5. The numbers represent thousands, and in an accident they would represent up to 15,000 dollars for injuries to one person, up to $30,000 for all bodily injuries, and up to $5,000 for any property damage done. Even though these are the required minimums, you can purchase more. You will be financially responsible for any damage or losses incurred over the policy limits. So in this example, if your accident was to cause $23,000 in property damage, the insurance company would pay $5,000 of it, and you would be on the hook for the other $18,000.
Full coverage is actually a plan with liability insurance, with comprehensive and collision coverage added to it.
Comprehensive insurance was put in place to give you coverage for things that are less likely to be your fault. It is typically called "other than collision" coverage, or OTC, and can include coverage for things like damage from the elements, fires, thefts, and even animal accidents.
Collision coverage pays for damage to your car, assuming you are at fault. The other driver's liability will pay for damage if they are at fault. Collision has it's own separate portion of your policy, and also has it's own separate deductible. It is highly recommended, because it could be the only way you could be compensated for your losses if something was to happen to your car. You can't get collision coverage without having comprehensive, but you can get comprehensive without collision. States don't require collision, but finance companies will require full coverage for any vehicle financed through them.
The coverage type you need will depend on your situation. And as I said before, if you are going to go with just liability, the required minimum may not be enough. Additionally, I highly recommend purchasing collision coverage because it's better to have it and not need it, than to need it and not have it. Purchase your liability, and decide for yourself what other options work best for you.
This article was written by Brad King for www.BuyingAutoInsuranceOnline.net Please compare plans through us when Buying Auto Insurance Online.
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