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How to get the Most Out of Your Plan

"Full coverage" is a term you will encounter frequently on insurance sites and in speaking with agents. But because the term is rarely defined adequately, few shoppers actually know what such a policy entails. Indeed, the industry has several different views on exactly what these types of plans should and should not include. Speaking generally, these policies offer protection above and beyond the standard liability protection provided by all policies. Most commonly, that means the policy offers comprehensive auto insurance as well as collision. As you will read in what follows, however, these plans can become infinitely more complex, which is why you as a consumer should inform yourself before you buy.

The quintessential difference between this type of offering and bare-bones liability options is that the former will pay for damage to the insured's vehicle as well as that done to the vehicles of others in an accident for which the insured is at fault. Without this type of protection, the plan would pay for the injuries and property damage caused to others, but the repairs to the policyholder's vehicle would be his/her own financial responsibility. The option that pays for such repairs is known as collision.

Even when a loss does not involve an actual collision, these policies may still pay for the damage if the policy also includes a comprehensive add-on. Comprehensive essentially takes care of most of the damage a vehicle can sustain outside of a collision with another vehicle or object. Covered losses might include theft, vandalism, fire, and weather-related issues like hail and wind. Typically, only a full coverage offering would offer both comprehensive and collision protection.

Pros and Cons of These Types of Plan Offerings

The most salient advantage of carrying this type of plan is the peace of mind of virtually all-inclusive protection. In the event of an accident, your policy will insulate your finances against the costs of having to repair or replace your car or truck and/or the vehicles of others. You also usually receive useful and valuable add-ons such as uninsured motorist and rental reimbursement, which will pay for a rental car if your vehicle becomes disabled.

On the other hand, the disparity in premiums between a basic liability-only policy and something more involved is substantial. While cheap full coverage protection is by no means impossible to obtain, these policies always cost significantly more to carry than their bare-bones liability counterparts. Of course, the extra premiums you pay may pay for themselves in the long run if you suffer a loss for which you would have otherwise been entirely financially responsible.

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