Do you know all the coverages included in your auto insurance policy? For a moment, imagine you have a first-aid kit. When you open it up, there are several things in there you might need in case of an emergency such as bandages, ointments, burn cream, insect bite treatment, etc. You may never use the burn cream, but it’s there if you ever needed it. Your auto insurance policy is like that in a way. When you select an auto insurance policy, it's a package of several types of coverage within the policy.
When you hear of a Full Coverage policy, it means you have certain coverages in your auto insurance policy that cover more than your state’s minimum car insurance requirements. In some states, full coverage will cover damages for all parties involved in an auto accident you caused up to your policy’s coverage limits. Liability Coverage for property damages will generally only cover damage to the other party’s vehicle, but damages to your vehicle will not be covered. It’s all about what coverages are in your policy and what types and amounts of coverages your state law requires to be a legal driver in your state.
Why Choose Property Damage Liability Coverage?
So, you might be thinking, "why would I want only property damage liability coverage if it doesn't cover damages to my vehicle?" Many people choose to purchase only property damage liability coverage because the insurance premium is less expensive. For some, the value of their vehicle and what the repairs would cost compared to how much they would pay in insurance premiums for full coverage is usually a deciding factor in choosing liability coverage instead of full coverage. Property damage liability coverage is typically an option only for those who do not have a lien on their vehicle. Sometimes people will have full coverage on their vehicle until it is paid off and then consider changing their policy to liability only for property damage.
What About Bodily Injury Coverage?
Let’s say you decide that property damage liability coverage is the right route for you. It’s important to make sure you have enough coverage for bodily injury. There are two types of liability coverage: Bodily injury liability coverage and property damage liability coverage. If you were to cause an accident and someone got injured, you would need enough bodily injury coverage to pay for possible medical expenses. If you don’t have enough coverage, it’s possible that you could become personally responsible for those medical expenses.
What are the Benefits of Full Coverage?
Full coverage typically includes Property Damage Liability Coverage plus other coverages like Collision, Comprehensive and Bodily Injury Coverage which covers more than just your state’s minimum insurance requirements. These additional coverages may help pay toward the repair or replacement of your car as well as other covered losses such as theft.
Just because your vehicle is paid off, it doesn't mean you should switch from full coverage to property damage liability coverage only. According to one report that analyzed 33 states, the mean cost of a crash involving property damage with no apparent injuries was $10,582 in 2016. While that lower premium for buying only personal property liability coverage sounds tempting, think about what you would do if you had an accident and the damages to your car were $10,582 or more. Here are some things to think about when considering switching to personal property liability coverage only on a vehicle that is paid off:
- What is the value of your vehicle? If your vehicle still has a lot of value, you may want to keep the full coverage. However, if your vehicle is paid for and the value is pretty low, liability coverage for property damage might be a better fit for you because your limit for replacement and repairs will depend on the value of the vehicle. You can check the value of your vehicle through NADA.
- If you were to have an accident, would you be prepared to cover the repairs or replacement cost yourself? That's the beautiful thing about insurance: It’s there to help with repair or replacement costs. Accidents happen and you might not always be in a place where you are prepared to pay for the repairs or replacement cost out of pocket. Full coverage can help offset some or all of these costs.
Now that you know a little more about full coverage and personal property liability coverage, take a look at your auto insurance policy and see what coverages are included in your current policy. Give us a call at 800-664-9309 to have one of our experienced agents help you find the right policy that best fits your needs and budget!