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Happy St. Patricks Day! Don’t trust your Luck! Insure your car for full coverage!!!
March 16, 2012

Happy St. Patricks Day! Don’t trust your Luck! Insure your car for full coverage!!!

A woman from down in South Texas
Was divorced and had 25 ex-es
She just had to admit
That she could not commit
To a man who did not drive a Lexus!
~ Bernie Pedersen

What Is The Difference Between Full Coverage And Liability Coverage?

Auto insurance has many different descriptions and coverages, and it is easy to get confused between these. Two main categories of car insurance are liability coverage auto insurance and full coverage car insurance, and the difference between these two can be wide. Vehicle insurance is required in every state in America, and the coverage amount that each state demands will vary from one state to the next, but all states require a minimum liability coverage amount.  In Illinois the minimum liability coverage required to be legally insured is $20,000 per person & $40,000 per accident Bodily Injury coverage (BI) and $15,000 in Property Damage liability coverage. (PD)  You are also required by Illinois state law to carry $20,000 per person & $40,000 per accident in Uninsured / Underinsured Motorist Bodily Injury coverage. (UMBI & UIMBI)

Liability Only car insurance is coverage that occurs when there is an injury or damage to people and property, excluding damage to your own vehicle. With a Liability Only policy there is no coverage for any physical damage to your own car.  There are three sections to liability automobile insurance, the coverage limit per accident for bodily injury per person, the coverage limit maximum for all injuries sustained by all people per accident, and the maximum limit for property damage coverage per accident. It may be wise to purchase more than the required minimum limits of liability vehicle insurance required by your state, to ensure that you have adequate coverage and do not end up with big bills after an accident in addition to insurance coverage.

Full Coverage auto insurance includes liability coverage and also includes collision coverage and comprehensive coverage that cover damage to YOUR car. It is possible to purchase liability and comprehensive coverage without including collision coverage, but if you opt for collision coverage you must include liability and comprehensive. Comprehensive car insurance covers things besides collisions that can cause damage to your vehicle, such as weather related events like tree or hail damage, fires, theft, and even hitting an animal in the road, although most consumers would consider the last one a collision event.  Collision coverage is exactly what it sounds like.  It covers damage to your vehicle if you are involved in any type of collision. On most insurance policies, the Comprehensive and Collision coverage are subject to a deductible, which is a co-pay amount.  You agree to pay the deductible first, then the insurance company picks up the balance of the repair or replacement cost of the vehicle. It is important to note that insurance companies generally pay only for the “actual cash value” of your vehicle at the time the claim occurred. You can get a ball park idea of the actual cash value of your car by checking website such as Auto Trader or and searching for vehicles similar to yours in age, condition, mileage and features that are currently being sold in the geographical area where you reside and where your vehicle is insured.

If you have a loan on your vehicle you will be required to carry Full Coverage insurance on your financed vehicle.  Your automobile finance company requires this because in the event of a total loss claim on your car they want to make sure the insurance company reimburses them for the money they loaned you to purchase your vehicle.  Many people do not owe a debt on their vehicle, so they do not purchase collision or comprehensive car insurance, and this can sometimes be a big mistake. There are several different things to consider before deciding to forgo these auto insurance options, or you could end up regretting your decision. Consider the blue book value of your vehicle, and the maximum you will get from the other drivers car insurance company under no fault or other liability only insurance laws. If your vehicle is fairly new with a good value, then full coverage is a good idea so that you can replace the vehicle in the event it is totaled. Otherwise you may end up unable to afford a replacement vehicle of the same condition or quality, and end up driving a junker instead because of no comprehensive or collision auto insurance.  If you do consider dropping the physical damage coverage on your vehicle, most insurance companies offer a coverage called Uninsured / Underinsured Motorist Property Damage coverage (UMPD).  This coverage is typically very inexpensive.  It will cover damage to your car caused by a collision when you were not at fault but the “at fault” driver was either uninsured or underinsured.  UMPD is subject to certain limitations so if you want to know more please contact the agency for more complete details.  847-359-6070.

Collision coverage can be added with comprehensive coverage, and if you still owe a balance on financing for the vehicle, most finance companies require collision auto insurance coverage as mandatory. This protects the finance company if there is an accident and your vehicle is totaled, with the car loan being paid off by the insurance payment. Don’t trust your luck, call Pedersen Insurance for a great price on car insurance today!!!

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