What is Auto Insurance: Do You Need Comprehensive or Liability Coverage?
Auto insurance, also called "car insurance," provides coverage to the owners of a car or truck against losses incurred as a result of damage in an accident and/or against the cost of legal liability.
Policies vary and may or may not include the following features:
- Cost of repairs
- Cost of replacing the vehicle if it is "totaled" in an accident, this is where the cost to repair damages exceed the cost of purchasing a new vehicle.
- Most importantly, liability insurance protects the owner by limiting financial liability in the event of an accident
When you choose the type of car insurance that is right for you, consider whether or not you need to have comprehensive coverage. If your car is very new, you may benefit from comprehensive coverage, however, it still may not cover the cost of replacing a newer vehicle in the event that the car is totaled in an accident.
If your car is older, you may want to purchase liability coverage only. Liability coverage is usually the minimum requirement for insurance in the United States in those states that require insurance coverage for licensed automobiles. In the U.S., liability insurance usually covers not only the owner of the car, but other drivers of the vehicle, as long as those drivers live at an address other than the owner's. Family members must be added to the policy in order to be covered.
Car insurance policies vary widely, so consult with your insurance representative to find out exactly what kind of coverage you have and what is right for you.
If you already have an insurance policy with full coverage for a while, it pays to talk to your agent the necessity of comprehensive coverage.
