From low cost car insurance to “platinum packages,” the market for car insurance policies is actually quite broad and able to meet virtually any need that a customer might have. While cheap car insurance options will cover drivers in just a handful of circumstances, more expensive options will lead to better coverage that requires both at-fault accidents as well as those where a driver is not at fault for causing the accident or being a part of it in any way.
Generally, insurance coverage for car owners can be broken down into a few distinct categories based on the cost and level of coverage afforded by the plan. It’s important to be familiar with each of these options before selecting one from a major insurance company.
Fully Comprehensive Car Insurance
The most well-rounded insurance policy available to today’s drivers is known as fully comprehensive coverage. The plan covers virtually any kind of damage that a car suffers, even if the driver is at fault for that damage having occurred. Fully comprehensive car insurance plans cover the vehicle against both at-fault and not-at-fault accidents, as well as fire and theft. Some plans even cover the insured driver while they use other vehicles that are owned by friends or relatives.
Despite its fully comprehensive nature, it’s worth noting that most car insurance plans in this category do not cover the full cost of vehicle replacement. Many will cover 80 to 90 percent of that cost in most cases, so it’s important to read the terms and conditions of the policy before agreeing to purchase it. Customers should always read every last word of insurance policy fine print to prevent unpleasant surprises, especially when comprehensive coverage is involved.
State Minimum Car Insurance Coverage
The polar opposite of fully comprehensive coverage can be found in state-mandated car insurance minimums. These plans cover the most basic costs of vehicle repair or replacement, as well as minimal costs associated with the treatment of pain or other injuries incurred by the driver while on the road. Such a plan is perfect for those who have limited financial means, as it allows them to keep the car on the road legally without costing an arm and a leg in the process.
While this option is good in terms of monthly cost, it may cause serious financial headaches in the event of an at-fault accident. That’s because most state minimum insurance policies do place the majority of the financial burden from an at-fault accident on the shoulders of the at-fault driver.
Collision Coverage
State minimum insurance plans will not cover collision damage to the car, and some fully comprehensive policies will not cover that damage either. In those cases, it’s necessary for customers to purchase a collision “add-on” to their policy, which will help pay the expenses associated with vehicle repair or replacement after it has been in a major collision. Without this coverage, most of the expenses associated with a repair of the vehicle’s body will be the responsibility of the car owner.
Uninsured or Underinsured Motorist Coverage
Some people do drive without insurance coverage, while others drive with too little. That can put an undue financial burden on other motorists in the event of an accident if they do not purchase an underinsured motorist policy. This small add-on costs just a few extra dollars per month at most major insurance companies, and it covers the gaps between a third-party motorist’s minimal or absent coverage, and the coverage held by the policyholder. It’s an essential way to cover all bases.