Full Coverage Auto Insurance Advantages/ Disadvantages

Choosing full coverage auto insurance may or may not be a good idea for you. There are some great advantages to having full coverage insurance, but this does come with some disadvantages as well. Read on to see if it’s a wise decision for you.

Financed Cars

If you have a new car or a car that is being financed, most banks will require that you keep full coverage on the vehicle until it is paid off. This makes sense. If something happens to the car you don’t want to have to continue to make payments on a vehicle that is no longer useful. The full coverage insurance will protect that from happening in most cases. If you’re in an accident where the car is totaled, the insurance will generally pay the car off for you.

If you have taken a loan against the car, it’s common practice to require full coverage as well to protect the banks collateral.

Who It Covers

Full coverage insurance will cover all drivers who are legally allowed to drive while in your car. If you loan your car to a relative, or even if it’s taken without your permission, the insurance is still on the car. Liability policies usually cover any driver who has permission, but may require you exclude some drivers. Examples of this could be if you have a younger sibling living at home, you may be required to exclude that person from the policy. So if your teenage brother takes your car one night and something happens, it may not be covered with liability only insurance policies.

Car Rental Services

Many insurance companies will provide a complementary rental or loaner car if your car is expected to take more than 24 hours to repair providing you have full coverage insurance. This can be a great benefit. You don’t have to pay out of pocket for transportation to work and other errands while you wait on your car to be repaired. With liability insurance this may be offered at an additional fee, but is rarely, if ever, included with your liability plan.

Benefits Up Front

With some insurance plans, full coverage policies will pay you up front for the repairs that need to be done. Often they will send payment directly to the repair shop so you don’t have to worry about whether or not you will have the money to pay them. With liability insurance any repairs that are covered are usually reimbursed. This means you have to pay up front most of the time out of your pocket and wait for the insurance company to cut you a check.

Premium Costs

With full coverage you are going to pay much higher premiums. If you don’t have a car that is financed or has a lot of after market customization to it, you may want to consider getting just liability insurance. If the car is aging, you have a better chance of replacing it for much cheaper. If the value of your car is something that you can replace easily, or if the full coverage premiums add up to more than the car is worth over the course of a year, then forego the full coverage and just insure with liability.


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