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Friday, October 18, 2013

What is Full Coverage Auto Insurance? Can I afford full coverage?

I often get the request for full coverage auto insurance. I always ask the client "What does full coverage auto insurance mean to you?". Often, they are stumped because all they know is that they need something called "full coverage auto insurance". Usually, they will tell me that full coverage auto insurance includes liability, collision coverage, comprehensive coverage (also known as Other Than Collision), and rental car coverage. However, in reality, there is no such thing as "full coverage" because it doesn't exist. There is no auto insurance policy available that provides coverage for every possible scenario or event that could happen to you. Still, what "full coverage" should mean includes:
  • Liability coverage (the Texas State minimum required is $30,000 per person, $60,000 per occurrence, and $25,000 for property damage done to others)
  • Uninsured Motorist or Underinsured Motorist (coverage for you and your passengers should you be injured and incur damage by an at fault party that doesn't have or doesn't have enough insurance). There is a $250 deductible for this coverage
  • Collision Coverage (covers damage to your auto, vehicle, truck or car if you are at fault)
  • Comprehensive or Other Than Collision (covers your car, vehicle, truck or auto for fire, flood, theft, vandalism, falling objects, windshield)
  • Personal Injury Protection (PIP) covers medicals bills for anyone in your vehicle that is injured while in the vehicle, no matter if there is an accident or not, no matter who is at fault. Plus, it can cover a portion of lost wages due to the injury.
  • Medical Payments does the same thing as PIP, but doesn't cover the lost wages. Using either PIP or Med pay usually doesn't affect your rates.
  • Note: If you decide against either PIP or Med Pay, and/or Uninsured or Underinsured motorist, you have to sign paperwork declining the options.
  • Rental Car Coverage which provides money to go towards a rental car if you have a covered loss. It does not provide you a rental car if you are having maintenance done on the car - it has to be a covered loss.
  • Towing coverage provides towing up to a certain dollar amount or radius. Be sure you know which one. Usually, if this coverage is used it doesn't affect your rates.
  • There are other coverages too such as life insurance should you pass from an accident and extra stereo or aftermarket equipment.
How can you afford full coverage? Well, buy raising your comprehensive (Other than collision) and collision deductible to $1,000 or higher. You can also decline PIP and/or Med Pay as well, especially if you have health insurance. Also, ask for discounts for your profession, alarm or GPS tracking device discount, multi-car discount, auto/home or auto/renters discount, Life Insurance discount, mutli-lines discount. Don't be afraid, ask for every discount you can.

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