If you have full coverage auto insurance, it means that your car is protected from physical damage. This type of protection doesn’t extend to the contents of your vehicle unless you have a rider which covers specific items, such as equipment, that you are transporting in your vehicle.
If your personal property located in your vehicle is damaged or destroyed as the result of a loss, you would make a claim for compensation under your homeowners’ or tenants’ insurance coverage. You need to make sure that the value of the property is higher than your policy deductible or it probably isn’t worth your while to file a claim.
To find out whether you should be making a claim for a loss under your auto insurance policy or your homeowners’ or tenants’ coverage, contact your insurance provider. You can also check your policy language to see what types of losses you are covered for and what the policy exclusions are.
Physical Damage Auto Insurance Coverage
Physical damage auto insurance coverage has two components: collision and comprehensive. Collision coverage pays for the cost of repairs to your vehicle following an at-fault accident caused by striking an inanimate object. It also pays out when the damage to your car is caused in an incident where the at-fault driver cannot be identified, such as a hit and run accident.
Comprehensive auto insurance coverage also protects your vehicle from physical damage. It covers losses stemming from incidents other than a collision. This is the part of the policy which pays out if your car is damaged by wind, hail or a flood. It also pays for damage caused by striking an animal, falling objects or vandalism. The comprehensive part of your policy also covers you against a loss due to theft.
Both types of physical damage auto insurance pay out based on your car’s cash value. You will need to pay your policy deductible before the insurance company will cut a check to pay for your claim. If your car is totaled in an incident or is stolen and not recovered, the insurance company will write a check for the car’s cash value, less the amount of your policy deductible.
Full Coverage Auto Insurance and Older Vehicles
If you are driving an older model vehicle which has been paid off in full, it may not make sense to keep full coverage in place. Once the value of your car has depreciated to the point where it is close to or less than your policy deductible, you may want to consider dropping full coverage on it.
At that point, you can consider eliminating the collision coverage entirely. The comprehensive coverage can be limited to fire and theft only to save money and reflect your insurance needs. This choice will also help you to save on the cost of your coverage, since a good portion of the amount you pay in premiums reflects the cost of protecting your automobile from claims for physical damage.