There is a common misconception among drivers regarding their full coverage auto insurance. Many believe they have an insurance policy that covers all types of damage or injury. But, they are badly mistaken.

While we may use the term often, there is actually no such thing as a “full coverage car insurance policy.” What we consider full coverage car insurance is usually a combination of two or more types of coverage. This can include collision, OTC (other-than-collision) and liability insurance.

 

Understanding Liability, OTC, and Collision Insurance

 

It’s important that all drivers understand what different insurance policies cover. And what they don’t.  Here are the three main types of insurance coverage options and the type of damage they cover.

 

Liability Insurance Coverage

 

Liability insurance breaks down into two coverage areas. There’s bodily injury liability that covers any injury caused by the driver to someone else. This coverage will take care of any injury caused by the policyholder or their listed family members. Even if the covered individual is driving another person’s car, with their permission.

 

Property damage liability pays for damage caused by the driver or others listed on the policy. This can include damage to another car or damage to a residential property such as a fence or building.

 

It’s very important to have liability car insurance. If there is an accident, liability insurance can protect the policyholder from legal issues. Such as, if the other party seeks compensation. Most states have a minimum amount of liability insurance all drivers should take out. However, it’s recommended to take out more than the state minimum to ensure there is plenty of coverage available.

 

OTC Insurance Coverage

 

OTC (other-than-collision) coverage takes care of any loss or damage due to issues that are unrelated to a collision. This could include fire, theft, or falling objects such as tree branches. OTC insurance also covers cracked or shattered windshields.

 

OTC  insurance coverage will reimburse loss due to theft. It will also cover the payment to repair any damage to the vehicle. This coverage is available with a deductible that ranges between $100 and $1,000. By choosing a higher deductible, drivers can lower their premium.

 

Collision Insurance Coverage

 

Collision coverage pays for damage to the policyholder’s car after an accident. The accident can include a collision with another car, an object, or the car flipping over. It can also provide coverage for damage to a car due to potholes. Collision policies are available with a deductible that also ranges between $100 and $1,000.

 

This coverage will reimburse the policyholder for the cost of their car repairs. Even if they were the one at fault. If that is the case, they will receive payment for the repairs, minus the deductible. If they were not the at-fault driver, their insurance company might attempt to get the amount they paid from the other party.

 

There are many drivers who believe they have full coverage insurance when they do not. It’s important that all drivers learn the facts about their policy. And always ask questions if there is something they don’t understand. Anyone unsure about their coverage should consult with their insurance agent today. Doing so can help prepare drivers for what lies ahead the next time they get behind the wheel.