Full Coverage or Liability Auto Insurance
Full Coverage or Liability Auto Insurance
When getting auto insurance quotes the buyer needs to decide what type of coverage they would like to have. With so many different options available the choices can be overwhelming. One of the most important decisions that will need to be made is whether the vehicle is going to be "fully covered" or if the policy is going to be a liability only policy.
Although the phrase "full coverage" is used often, in California, there is no such thing. Many consumers believe that they are fully covered for any damages that they cause in an accident. This is not the case. All auto insurance policies will be written with maximum limits of coverage. The insurance company will only pay up to the maximum for the limits that are listed on the policy.
The proper phrase to use, rather than "full coverage", is physical damage coverage. This means that the policy will have comprehensive and collision coverage on your policy. If a driver is involved in an at-fault accident and the policy has physical damage coverage the vehicle will be covered to the fair market value or actual cash value for the amount that exceeds the deductible. The deducible chosen on the policy will be the first amount that needs to be paid out on by the policyholder for repairs or replacement of the vehicle.
When choosing the between a liability only policy or having physical damage protection as well, it is best for the buyer to research the value of the vehicle that they are requesting to insure. If the vehicle has a value of $1000 and the increase in premium for the vehicle is $500 per year then it would not be wise to carry physical damage coverage on the policy. If the policy has a $500 deductible, after the first year of paying the additional premium the insured would have paid out more in premium than the value of the vehicle. This is not always the case though. If a vehicle has an actual cash value of $20,000 and the additional premium is $750 per year for physical damage it would be recommended to purchase the coverage.
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