There are a lot of good deals to be had in life if you know where to find them. Full coverage auto insurance is an example of such a value, particularly because it provides a combination of collision and comprehensive coverage which looks out for your financial interests in an accident or circumstance in which your vehicle is damaged, lost, or destroyed. But what exactly is Full Coverage Car Insurance? Continue reading to find out why the term can be misleading in some cases.
What is “Full Coverage Car Insurance?”
The term “Full Coverage Car Insurance” is a bit of a misnomer as there is no such thing as “Full Coverage Insurance”. Full coverage implies that everything will be covered 100% for any circumstance. The fact is, there is no insurance company that makes this promise. So what does the term “Full Coverage” mean? Generally speaking, it means that you have both physical damage coverage in the form of Comprehensive and Collision Coverage, as well as liability coverage by way of your Bodily Injury, Property Damage, Un-Insured Motorist, and Under-Insured Motorist Coverage. One could argue that it also includes Rental and Towing coverage along with a few other coverages as well. With all of that said, having all of these coverages is the right decision for many people.
You Broke It; Insurance Buys It
Whether you drive a high-end sports car or a family-friendly minivan, chances are you put a lot of money into the purchase of your vehicle. Losing that vehicle in an accident would be detrimental to your family and lead to several years of financial setback. That is, unless, you purchase full coverage auto insurance to protect your investment.
With full coverage, your insurance company generally pays for repairs or actual cash value replacement of your vehicle minus your deductible. So while you do have some out-of-pocket expenses, it’s not nearly as much as you would have to pay without having both comprehensive and collision coverage.
Is There Ever a Good Time to Drop Full Coverage Auto Insurance?
Many people wonder if there is ever a good time to drop collision and comprehensive insurance. Though some contemplate doing so, approximately half of all drivers choose to continue maintaining full coverage even after paying off a vehicle and owning it for many years.
Do the Math
Though we would rarely – if ever – recommend dropping your full coverage auto insurance, it might help if you see the math for yourself. Take, for example, a 30-year old Minnesota woman paying just $750 per year for full coverage insurance plus liability and uninsured motorist protection on her 8-year old sedan. The collision and comprehensive protection portion of her policy cost approximately $350 per year. Assuming she had a $500 deductible and her car was valued at $6,000, she would receive a reimbursement of $4,500 from her insurance company if her car were totaled in an accident.
That means she is paying just over 7 percent in premiums each year to protect against a loss of nearly 100 percent. Dropping full coverage puts her at risk of losing thousands of dollars that could otherwise be applied toward the purchase of a future vehicle. Until the value of the replacement drops too low to justify the premiums, full coverage auto insurance remains a good idea.
Shop and Compare Full Coverage Insurance
Have you ever wondered why you and a friend could pay such drastically different prices for the same full coverage auto insurance? Chances are it is because one of you did not shop around for coverage before buying it. Simply working with an independent agency like Andreotti Agency can help you find competitive quotes on full coverage auto insurance from several of the leading insurance companies throughout Minnesota.
If you are considering full coverage as a part of your auto insurance protection plan, contact our office to request a free quote. We look forward to serving you soon.