You hear people talk about liability insurance and full coverage insurance, but what does that exactly mean? The phrase "full coverage" can be very misleading, so to avoid any financial hardships or confusion later, take a moment to understand the difference and what it means to you as a car owner. It makes an impact on your rates, so if you are checking into a cheap auto insurance company, it is important to know the difference.
1. Full Coverage Auto Insurance
Full coverage does not mean that anything in the world can happen to your car and you can get a new one. Unfortunately, many car owners mistakenly believe this, and don't find out otherwise until they have a claim denied. When searching for a cheap auto insurance company, be sure they spell out each coverage, what it means, the cost, and your options.
One scenario would be if you call claims to advise the motor blew up and you need a new car. They will ask a few questions to be sure, but if your motor blew up simply because of wear and tear, it is not covered. Now if you slipped on ice and hit a tree and your motor blew up as a result, that would be covered.
Keep in mind that even if your totaled vehicle is covered, it will not buy you a new car. Your insurance company will assess the current value of the car including depreciation for the apparent pre-wreck condition of the car and tires. After you pay your deductible, they will then provide you a check with the remaining amount you are entitled to and you can then use it for your next car purchase.
Really what full coverage really means is that you are carrying physical damage protection for your car. This would include Collision and Comprehensive coverage. Collision will cover any damage to your car unless another person is required to pay it, and Comprehensive will fix or replace your car for theft, fire, vandalism, storm damage, glass, and animal impact.
With this coverage, your policy will be more expensive, so it will be more important to compare and find a cheap auto insurance company that you can afford.
2. Liability Only Auto Coverage
Liability only usually signifies that you have Bodily Injury Liability and Property Damage Liability. This is coverage that the state will require you to have to be legal on the road. You may also have Uninsured Motorists protection and perhaps some medical coverage unless you explicitly excluded these options. This is true for any type of policy.
The key to choosing liability only coverage is to be sure you have more than just the minimum amount required. If you only carry liability insurance, you already have a cheap auto insurance company. You don't have to pay the high cost of Collision with it.
Take advantage of this time to bring your liability limits up to at least $50,000. If you have a decent driving history, it will literally be a difference of a few dollars, but you will considerably enhance your protection, making it less likely you will suffer a financial loss.
Once you carry higher liability limits for more than six months, you will find that you will find it easier to get a cheap auto insurance company, whether you need full coverage or liability only.
