Posts Tagged ‘full auto insurance coverage’

Do I Notify the Lien Holder if I Change Auto Insurance Companies

Wednesday, January 18th, 2012

The question of whether you need to notify the lien holder if you change auto insurance companies is one that a number of drivers may be curious about. You can change insurance companies at any time – even during policy term itself – if you want to. The new auto insurance company will look after letting the lien holder (the bank or financing company which holds the loan for your vehicle) know that you have changed companies. You will need to provide the name of your lender to your auto insurance provider.

Required Auto Insurance Coverage for a Financed Vehicle

If you take out a loan to pay for your vehicle, one of the conditions of receiving the funding will be that you keep full coverage on the vehicle. Both collision and comprehensive protection must be maintained until you have paid off the loan in full. The lender wants to make sure that its interests are protected in case the car is totaled in an accident.

In a situation where the car is written off, the lender receives the payout from the auto insurance company. The insurance company will write a check for the loss based on the vehicle’s cash value, less the policy deductible.

Collision auto insurance coverage pays for damage to the vehicle caused by coming into contact with another vehicle or an inanimate object. It is also used when your vehicle is involved in a rollover accident.

Comprehensive auto insurance coverage comes into play when the damage is caused by a loss other than a collision, including the following:

Broken windshield
Falling objects
Fire
Flooding
Hail
Hitting an animal
Theft
Vandalism
Wind

Once your vehicle has been paid off in full, you can let your auto insurance company know so that the lien holder is removed from your policy. After that point, you would receive any payment from the insurer if your car was totalled in an accident.

When to Drop Full Auto Insurance Coverage

Since collision and comprehensive coverage pays out based on the vehicle’s cash value, it may not make sense to keep full coverage in place on an older model vehicle. If your car’s Blue Book value is at or below your policy deductible, you are paying for coverage that you will not be able to benefit from if your car is involved in a serious accident.

You can save on the cost of your auto insurance coverage by dropping your collision coverage entirely. The insurance company will allow you to limit the losses covered under your comprehensive protection to fire and theft only, which will provide some coverage but reduce your auto insurance costs.

Once you are getting close to the end of your loan term, you should get quotes for an auto insurance policy which does not include full coverage. This type of a change in circumstances is a good time to consider whether a new company can offer you a better price for the coverage you need. Physical damage coverage accounts for a significant portion of the amount you pay for auto insurance, and you may be pleasantly surprised at the quotes you receive.

Tags: , , , , , , ,
Posted in General Car Insurance |

What is Full Auto Insurance Coverage?

Saturday, July 30th, 2011

Full auto insurance coverage is physical damage protection for a vehicle. It includes collision and comprehensive coverage, which covers the policyholder’s own car.

Collision coverage pays for repairs when the damage caused to the vehicle is as the result of striking another vehicle or a rollover accident. This part of the policy also pays for damage caused in a rollover accident.

Comprehensive insurance protects the policyholder’s vehicle from damage caused by other events. It pays out when the damage is due to striking an animal, fire, vandalism, severe weather and flooding. It also pays out when the car is stolen.

Both types of coverage pay out based on the vehicle’s cash value. As soon as a driver takes his or her vehicle off the dealer’s lot, it starts to depreciate. The longer the driver owns the car, the lower the benefit he or she would be entitled to under the policy. In a case where there is an outstanding loan on the car, the financing company will probably insist that the driver keep full auto insurance coverage in place until it has been paid of.

Once the loan has been paid off, the vehicle owner may want to consider dropping the collision coverage entirely and limiting the comprehensive coverage to fire and theft only. This is a good strategy if the cash value of the vehicle is at about the same level as the policy deductible.

Tags: , , ,
Posted in General Car Insurance |

When to Buy Full Auto Insurance Coverage

Saturday, July 30th, 2011

Full auto insurance coverage is collision and comprehensive protection and it makes the most sense to put this level of protection in place when the vehicle being covered is new (or relatively new). Both of these types of insurance pay for physical damage to the vehicle. If a driver has taken out a loan to pay for his or her vehicle purchase, the financing company will probably require that full coverage be maintained on the vehicle until it has been paid off in full.

Collision coverage pays for the cost to repair the vehicle if it is damaged in an accident which involves striking another vehicle or an object. It also covers damage caused in a rollover accident.

Comprehensive insurance pays for damages due to events other than a collision. This part of the policy covers damage caused by severe weather, flooding, falling objects, fire and stones striking the windows or the windshield. It also pays out when when the car is stolen.

Both collision and comprehensive coverage pay out based on the car’s cash value, not what the owner paid for it or the vehicle’s replacement cost. If the car is totaled in an accident, the insurance company will write a check based on its value, less the deductible the policyholder has agreed to pay. In a situation where the total loss occurs before the car has been paid off, the insurance company will write the check to the lender. The owner is still responsible for paying off the balance of the loan.

 

Tags: , , , , ,
Posted in General Car Insurance |

What is Full Auto Insurance Coverage?

Wednesday, July 13th, 2011

Full auto insurance coverage refers to collision and comprehensive protection. Both of these types of insurance protect the policyholder’s own vehicle from physical damage. Collision coverage pays out when the vehicle is damaged in an accident which involves striking another vehicle or an inanimate object. It also pays out if the damage is due to a rollover accident. Comprehensive coverage pays out when the damage to the driver’s vehicle is caused by an event other than a collision with another vehicle, including fire, severe weather, flooding or hitting an animal. It also protects the owner if his or her car is stolen.

In most cases, a driver who took out a loan to finance his or her new car will be required to maintain full coverage until it has been paid for in full. The lender will want to protect its interests in the vehicle in case it is damaged or destroyed.

Both types of auto insurance coverage pay out based on the vehicle’s cash value if the car is totaled, as opposed to the replacement cost or what the owner paid for it. If a total loss occurs, the insurance company writes a check for this amount, less the deductible the policyholder agrees to pay. Over time, the level of coverage available from the insurance company decreases, while the level of premiums paid remains constant. Once the vehicle has been paid off, a number of drivers choose not to keep full auto insurance coverage in place as a money-saving measure.

Tags: , , , , ,
Posted in General Car Insurance |

« Older Entries