YOU ASK:

When should I purchase full coverage auto insurance?

WE ANSWER:

If you need to take out an automobile loan in order to buy a car, you will be required to get full coverage on your auto, instead of just basic liability coverage.

Full coverage auto insurance includes the must-have liability coverage, medical payments coverage, collision coverage and comprehensible coverage.

Why is Full Coverage So Important for Automobile Loans?

Imagine the following hypothetical situation: you decide to buy an auto on leasing that you agree to pay off in three years' time. The loan company remains the de jure owner of the vehicle until you pay off the loan. However, imagine that you get involved in an accident and you car is damaged beyond repair. If you don't have collision coverage, you will lose your car, while still having to pay off your loan.

To avoid such financially disastrous situations, automobile loan companies now strongly advise, and most of them actually require, people to get full coverage auto insurance which covers the insured's vehicle against physical damage.

Better Safe than Sorry

Although the minimum auto coverage option might seem very attractive, you and your auto are not personally exempt from the danger of being involved in a road accident. It happens even to the most vigilant and experienced drivers. Not to mention the hazards other than collision that your car faces. Here is a list of all the losses that your auto can experience, which are covered by Comprehensive auto insurance:

  • Theft
  • Fire
  • Flood, hail
  • Windstorm
  • Vandalism and malicious actions
  • Contact with an animal or a bird
  • Explosion
  • Earthquake
  • Falling objects
  • Missiles

The list of non-collision perils that can damage your automobile, as you can see, is too long to underestimate. If you have a bodily injury as a result of an accident and are underinsured, you might end up having to cover all the medical expenses on top of the loan instalments. As you can see, getting an auto loan entails a great financial responsibility on your part so you should purchase the whole auto insurance package regardless of the additional costs.

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