Full coverage auto insurance usually includes liability, collision, and full insurance. Here are the details of each coverage.
Car liability insurance
Liability insurance covers injuries and property damage accidentally caused to others with your vehicle. For example, if you accidentally crash into another car and injure the driver and damage his car, your liability insurance pays for medical bills and car repair costs, up to the policy limits. Liability coverage also covers judgments or court settlements and legal defense costs if you are sued for a car accident.
Liability insurance is displayed as three numbers, for example 50/100/50. These numbers represent the maximum payout limit for each part of the liability coverage.
50/100/50 translates into:
- 50 refers to $ 50,000 in personal injury liability for a person injured in an accident.
- 100 refers to $ 100,000 in personal injury liability in total for an automobile accident.
- 50 refers to $ 50,000 in property damage liability per accident.
Your state will have a minimum amount of liability that you need to carry. Most state minimums are woefully inadequate, especially if you cause a serious or multi-car accident. It is smart to buy higher limits, such as 100/300/100, to better protect yourself and the resources that may be stolen from you in a lawsuit.
Liability insurance covers only those you have caused damage to in a car accident. Liability insurance does not cover you, your passengers or your vehicle.
Collision and full coverage
The other main parts of a full coverage auto insurance policy are collision and full coverage. They are separate covers but are commonly sold together. Collision and full coverage pay to repair or replace your vehicle if it is damaged in an accident or a non-collision accident.
Collision coverage. It pays to repair or replace your car if it collides with another vehicle or object, such as a fence or post, regardless of the mistake. Collision insurance also pays for the malfunction of your vehicle, such as accidentally rolling off an embankment.
Full coverage. Pay to repair or replace your car if it is stolen or damaged due to fire, vandalism, floods, hail, collisions with animals, bad weather or falling objects.
For example, let’s say your car slips on ice and hits a guardrail. Collision coverage would pay for the damage to your car (and your liability coverage would pay for the damaged guardrail).
If your car is hit by hail and is riddled with dents, your full coverage would pay for the repairs.
Both collision and full coverage have a deductible, such as $ 500 or $ 1,000. The deductible is the amount deducted from your accident allowance. For example, if accident repairs cost $ 1,500 and you have a deductible of $ 500, your insurance compensation compensation will be $ 1,000.
Also, please note that collision and full payment pays the amortized value of your vehicle when you make a claim. This means that the maximum compensation for collision compensation and comprehensive insurance is the value of your car, just before the accident or damage, if any, minus the deductible.
Collision and full coverage are not required by any state, but if your car has a lease or loan, your lender will likely arrange for you to carry both covers.
What other coverage can be included in a full coverage policy?
Some states require other coverage to be part of your auto insurance policy. Common coverage required by the state includes coverage for uninsured motorists, personal injury protection coverage, and medical payments.
Uninsured motorist coverage
Uninsured motorist coverage helps pay for damage to you and your passengers and for damage to your car when the driver at fault is not insured. Normally, if you are involved in a car accident in which the other driver is at fault, their personal injury liability coverage would cover the medical expenses of you and your passengers. However, if the person drives without insurance, the coverage for uninsured motorists would help cover the medical expenses.
The coverage for uninsured motorists is sold in limits that correspond to the liability coverage. Some states require coverage for uninsured motorists, while in others it is optional.
Personal injury protection and medical payments
Personal Injury Protection (PIP) coverage helps cover the medical expenses of you and your passengers, regardless of who caused the car accident. PIP insurance also pays for lost wages and replacement services, such as childcare if you are unable to do so due to injuries. Some states require PIP, while in others it is optional or not offered.
Medical Payments Coverage (MedPay) also helps pay for the medical bills associated with a car accident for you and your passengers, regardless of fault. It is required in some states but optional in most cases if offered.
To build your full coverage auto insurance policy even further, there are other types of auto insurance coverage that you can add. Optional covers that give you extra protection include rental reimbursement, roadside assistance, and gap insurance.