Full Coverage Auto Insurance

You have an insurance policy for your car. But you are not really sure of the benefits that you are entitled to if your car is involved in an accident. It is difficult to decipher the actual meaning from all the jargon and technical sounding terms from the insurance document. What, for instance, is a full coverage auto insurance?

Unlike other policies, a full coverage auto insurance also covers you for medical benefits. The medical bills incurred by you for treatment of injuries sustained in an auto accident are paid by the insurance company. The company also promises to compensate for the damages that you may cause during the accident. This is unique to the full coverage auto insurance policy and is known as the liability coverage.

Although the full coverage auto insurance sounds attractive, it is always better to consult insurance agents and find out the facts for yourself.

The premium for such coverage varies from company to company and also depends on your age, gender and condition of your car.

The liability coverage can be categorized clearly under three different parts.

1. The insurance company pays all the medical bills for a single person caused by the action of the policy holder.
2. The company pays the medical bills for all the persons injured in the accident.
3. The insurance company bears the entire amount for the damage caused to property.

You can always change the limits of coverage according to your needs. It is best if you can choose a company which offers you adequate protection. You will find that the insurance companies pay only the amount that is specified in their declaration.

Opting for less coverage by paying less premium is not recommended. You will end up losing money when your insurance policy does not cover the entire expenditure. This is particularly true in case of liability coverage.

The comprehensive and collision policy of a full coverage auto insurance is also open to confusion. The insurance company only promises to pay the actual amount paid for the car. It does not cover the loan value. So even if your new car is caught up in an accident, you will not be able recover the entire amount for the expenses. As far as the property damages are concerned, the payment has no relation with the actual retail value and the company only pays the claim according to the 'blue book value'

It is better if you can understand how the insurance companies set a value on your vehicle. You may be surprised to know that the auto insurance companies will start depreciating the value of your brand new car as soon as you start driving it! So do your research before opting for any full coverage plan, and you will have a lot less to worry about…