There are many different types of car insurance available on the market, making it difficult for some people to choose the exact kind of coverage that is right for them. In addition to choosing between many different companies that offer car insurance, it is also necessary for a consumer today to choose between full or basic auto insurance.
Most people are familiar with basic auto insurance. This coverage is what is required by the state in which the consumer lives. Typically, this coverage will only pay for the other driver’s property damage and medical bills in the event of an accident. The consumer’s damages are their responsibility to pay for; basic auto insurance will not pay to fix the consumer’s car.
There are many additional coverages that can be purchased, however. Collision insurance will pay for the damages that occur to the consumer’s vehicle in the event that they are at fault in an accident. Comprehensive insurance will pay for damage that occurs to a vehicle or its contents as the result of vandalism, theft, or natural disaster. Uninsured motorist coverage will pay for the medical bills and damage to the consumer’s vehicle in the event that the consumer is not at fault in an accident, but the other driver does not carry auto insurance.
Having all of these types of insurance means that a consumer has “full” or “complete” auto insurance coverage. Deciding whether none, some, or all of these coverages are right for a particular consumer can get tricky.
Collision insurance is typically recommended for any consumer who has an auto loan on their car. Because this coverage provides money to repair or replace a car in the event of an accident, it is recommended for anyone who would not be able to repair or replace their car on their own if they did happen to be in an accident. Collision insurance can provide thousands of dollars to a customer, which might mean the difference between having to file for bankruptcy after an accident or simply replacing a car and going back to life as normal.
Is Collision Insurance a Good Idea?
This insurance can be expensive, however. In fact, many customers report that it raises their premium prices between fifty and eighty percent. For this reason, it is important to carefully consider if the customer really needs this coverage. A person with little or no savings and a car that is expensive to repair or replace would be an excellent candidate for collision insurance. Someone with a significant amount of savings and/or a vehicle that would be cheap to replace may find that it makes more sense to skip this coverage and save the difference in their premiums.
Many people find themselves in between these two extremes, however. It is very common to find people with very little savings, a high car payment, and very little extra income that could go towards increased car insurance premiums. Many insurance professionals recommend that a person in this situation consider what could happen if they were to lose or total their vehicle in an accident, and compare that to what would happen if they were to adjust their budget to afford the extra insurance premium.
Comprehensive insurance is also a difficult coverage to decide for many of the same reasons as collision insurance. Comprehensive insurance policies will vary between companies, making it necessary to compare the exact terms of each policy. In general, however, these policies cover damage to a vehicle that is the result of vandalism or a natural disaster. For example, a car that is damaged in a hail storm could have its body work and cracked windows replaced through comprehensive insurance.
Comprehensive insurance alone is often referred to as full coverage because nearly all insurance companies will require a customer to carry collision insurance in order to qualify for comprehensive insurance. This ensures that a customer will not claim damage that was the result of an accident under their comprehensive policy.
Comprehensive insurance will also cover the contents of a vehicle. Items such as computers and Christmas presents that get left in a vehicle are covered against damage and theft under most comprehensive policies. It is important to note that some people are required to have this coverage by their employer if they are authorized to take home company office equipment.
In general, however, this coverage will increase a premium about ten to twenty percent beyond the price increase for collision coverage. This makes it an ideal coverage for people with high dollar items in their car.
Full auto insurance coverage can be expensive, but there are a lot of differences in policies from different companies. There is a large difference in premiums among auto insurers that offer full auto insurance, as well as big differences in deductibles and maximum coverage amounts. Be sure to shop around and compare prices and coverage amounts before deciding if this is the right type of policy for you.