How Does Full Coverage Auto Insurance Work?

Insurance Mandated

When you purchase a vehicle, it must be covered by a minimum amount of liability insurance as mandated by your state. You may also elect for a greater amount of coverage to protect your car from different types of damage.

Collision, Comprehensive Coverage

Essentially "full coverage" denotes that your car is covered by the state required liability coverage, collision coverage and comprehensive coverage, which ultimately means that the value of any damage to your car will be covered by your insurance company. Collision coverage insures your car for damage caused by accidents while driving your car where you are at fault, such as hitting another car or object. Hitting animals, such as deer, usually falls under comprehensive coverage. Comprehensive coverage covers all other sorts of damage to your vehicle that are out of your direct control, such as fires, hail, falling trees, theft and floods. The types of damage covered by insurance packages vary, so make sure they meet your needs.

Determining Coverage

While full coverage seems like an obvious choice to protect against acts of God and possible collision damage, premiums cost much more. If you purchase a new vehicle, investing in some level of collision insurance and comprehensive insurance is a good idea, at least for the first few years you own the car, when its value is high. Older cars are worth substantially less than new cars, and therefore safe drivers may find it worthwhile to forgo collision and comprehensive insurance to save money.