Full coverage when it comes to car insurance means that you have comprehensive, collision, and liability at the very least. This protects the car owner’s investment, which is actually the lending company not you until you have paid the loan off that’s why they have the title, in case anything happens to the vehicle they are letting you drive.

Essentially, when you purchase a car with a loan, it does not belong to you until after you make the last payment. Sure, you can drive it and make it “your own,” but it still belongs to the bank, that is why if you miss enough payments they can “repossess” it. It is not called “reowning” for a reason, they are just taking possession of the vehicle again. While you are in possession of their vehicle they can and almost always do require that you maintain “full coverage” insurance on the vehicle.

But, what happens after you make the last payment and they hand (actually they mail it to you) the title over to you? Or, what if you went out and bought the car without taking out a loan? Either way, the title is in your hands, the vehicle is yours. Should you have full coverage on it? Some say, “NO.” Some say, “YES.” Some say, “What is insurance?”, but that’s a subject for another article.

There really is no “one” answer to this question. It is dependent upon a few variables.
Such as:
· How much is the car worth?
· Can you afford to pay for the repairs out of pocket if something happened to it?
· Can you afford to purchase another car if this one is totaled or stolen?

Most states require that you have liability insurance. This covers the other guy if you are at fault in the accident. What if you hit an inanimate object? How about an animal? If you only have liability, you are not covered.

One of the first things you really want to be aware of is question number one above, “How much is the car worth?” No insurance company is going to pay more to have the vehicle repaired than it is worth, nor will they insure it for more than its value. If you have a vehicle that is only worth $800 according to “Blue Book”, considered the authority on vehicle values, the insurer will not allow you to insure it for $10,000. It is a lose-lose situation for them and you. This would be a case where maintaining liability insurance on the car would be the most prudent.

On the other hand, if your car is worth $10,000 or more you will most definitely want to look into keeping it fully covered. Fully covered also means that you’re more valuable vehicle will be taken care of if it is vandalized or broken into, something that liability coverage alone will not do. Comprehensive coverage is the portion of auto insurance that covers these types of incidents. It will pay for your broken window, if that is how the thieves got in, and the stereo that may have been ripped from your dash. It will not pay for the items that were in your car, which can sometimes be quite costly, like laptops and other electronic equipment. Normally, the item stolen must be affixed to the car to be covered.

Either way, as you can see there are a few things to consider if you own your car outright. Do not just remove full coverage because you have paid the car off. Weigh the pros and cons of going without that extra coverage. Your car is a large investment and is well worth the protection of the best insurance coverage you can give it.

Comments are closed.