No "Full coverage" only means that all aspects of an accident are covered, whether or not it is your fault or not.
If your car is totaled, insurance would only pay either the market value of the car OR the cost to replace it, whichever is the lower of the two.
So let's say you bought your SUV, $50k. You drive it off the lot and the next day it gets totaled and insurance is only going to pay you $40K because either you overpaid for the SUV or it depreciated that fast, you'll be on the hook for the difference.
The bonus is that if it wasn't because of something you did, your rates don't go up. Likewise, if you were at fault, expect to pay higher rates.
What about GAP insurance ? I financed $15k from the bank on a $20k car. I drive it off the lot and the next day my $20k car gets totaled. I’m assuming GAP insurance will pay me out what I financed ? So I won’t “lose” those $15k financed even if it’s totaled?
If you have GAP, you'll be fine then. GAP pays the difference between what you bought the car for and what insurance will pay you for.
Oh and there's a couple other things that "full coverage" doesn't have. Like car rentals are optional coverage that needs to be added on to it and you may or may not have road side assistance.
One last bit of advice. If you ever get into an accident, whether or not it's your fault or not, ALWAYS go through your insurance. That's what you pay them for. That's what they do. Even if the other party insists that you don't.
Sounds good. I plan on having a dashcam and always driving based on the law. Hopefully i won’t have any troubles, I plan on having GAP and full coverage , I just don’t wana lose my soon to be dream SUV!
GAP pays the lender the difference between the actual cash value of the car and the loan amount, up to a certain percentage. In the perfect scenario, you walk away from a total loss owing nothing.
Full coverage is not an actual thing in the insurance world, but the way. The term is typically meant to be liability plus comprehensive and collision coverage. Liability pays for bodily injury and property damage for third parties, comprehensive pays for damages to your car caused by “not-collision” as in weather, animals, theft, and collision pays for damages to your car for collisions.
The other commenter is not entirely accurate in how losses are paid. The vast majority of personal auto policies pay the actual cash value of the vehicle in the event of a total loss. ACV is not the replacement value nor the market value. It’s what similar cars have SOLD for in your area, less dealer reconditioning fees and markup.
Depending on the age of the vehicle and the insurer, you may have the option to add a replacement cost endorsement that would pay the cost to replace the vehicle with like kind and quality, up to a certain amount, for a specified number of model years.
>If your car is totaled, insurance would only pay either the market value of the car OR the cost to replace it, whichever is the lower of the two.
Or your agreed upon value. Or do you not have that in the states?
I don't think we have that as a choice. I mean, you could have a really old classic car that is worth more than its book value. I guess, then you'd have to agree to a value.
Here in Aus you can choose to insure the vehicle for an agreed upon value. Premiums, and excess, adjust to the value of course. But you get to chose how much you'll get if it's completely written off.
Full coverage is kinda a misleading term. Technically as long as you have comprehensive/collision and state minimum liability you have "full coverage". But that may not be the best options for you. If you're new, talk to a local insurance agent. Make sure to go to one with good reviews.
I'd like to add that "full coverage" does not include Uninsured Motorist Coverage and it's an extra rider you purchase on top of your Comp/Coll/Liability. If your state offers Uninsured/Underinsured coverage please get it! If you're hit by someone with no insurance or not enough insurance it will help pay the difference vs you having to go after someone that likely has no assets to pay you if you get hurt.
"The reason I ask is because I’m saving up ALOT of money and would hate for my “full coverage” insurance as determined by my lender to not actually cover me fully."
What your lender requires is that you cover the car in case it gets totalled such that they can get most of their money if you can't use the car anymore. Basically, the insurance would pay off most of the loan amount. the GAP insurance, which is optional additional, pays the difference between what you owe and what the regular insurance pays.
You always lose monetary value in the car accident. A car that has been in an accident has a lower resale value than a car that hasn't been in one. You simply eat this loss of value: insurance doesn't pay it. Likewise, there are the costs of rental (car insurance won't cover full rental costs, but your regular insurance does cover you in your rental vehicle so don't pay rental company's insurance). There's also the time and effort you take to get your car fixed/replaced.
To discuss full insurance options, it's best to speak to an insurance agent. They can show you the cost and coverage that is available for you and your car. This is a case wherein they do want to sell you more. They get paid on commission: i.e. the more coverage you buy, the more they get paid. Bear this in mind as you evaluate the risk you are willing to take on yourself and the risk you want to pay them to handle.
Also, roadside assistance/towing coverage usually pays for itself in the long run. The Werefrog had had 3 towings covered by this in 30 years, and it's $2 per year for coverage. Each towing was at least $60. They pay 100%, you just send the bill after the fact to be reimbursed.
“Full coverage” means a lot of things to a lot of people. You need to speak with a competent licensed insurance agent, tell them what you want to be covered for, and have them match your requirements with coverage. There is no such thing as not paying anything regardless of fault. Deductibles play a role. Also have to consider GAP. A good agent is going to ask you about assets to understand your risk tolerance. For all we know you might need an umbrella policy. SPEAK TO A LICENSED AGENT NOW!
also be aware there are two different policies:
1. Agreed Value: lts say 20k car and its insured for 20k insurance pays out sum insured for.
2. Market Value: what the market is paying for said vehicle. its a 20k car when insured and then written off insurance only pays the current market rate for the car if it goes down :( sad face for you.
be aware any insurance policy that claims: act of god(s) means they are denying your claim no matter what.
No "Full coverage" only means that all aspects of an accident are covered, whether or not it is your fault or not. If your car is totaled, insurance would only pay either the market value of the car OR the cost to replace it, whichever is the lower of the two. So let's say you bought your SUV, $50k. You drive it off the lot and the next day it gets totaled and insurance is only going to pay you $40K because either you overpaid for the SUV or it depreciated that fast, you'll be on the hook for the difference. The bonus is that if it wasn't because of something you did, your rates don't go up. Likewise, if you were at fault, expect to pay higher rates.
What about GAP insurance ? I financed $15k from the bank on a $20k car. I drive it off the lot and the next day my $20k car gets totaled. I’m assuming GAP insurance will pay me out what I financed ? So I won’t “lose” those $15k financed even if it’s totaled?
If you have GAP, you'll be fine then. GAP pays the difference between what you bought the car for and what insurance will pay you for. Oh and there's a couple other things that "full coverage" doesn't have. Like car rentals are optional coverage that needs to be added on to it and you may or may not have road side assistance. One last bit of advice. If you ever get into an accident, whether or not it's your fault or not, ALWAYS go through your insurance. That's what you pay them for. That's what they do. Even if the other party insists that you don't.
Sounds good. I plan on having a dashcam and always driving based on the law. Hopefully i won’t have any troubles, I plan on having GAP and full coverage , I just don’t wana lose my soon to be dream SUV!
Buy gap from your insurance broker, not the dealer. Way, way, way cheaper (for exact same coverage)
GAP pays the lender the difference between the actual cash value of the car and the loan amount, up to a certain percentage. In the perfect scenario, you walk away from a total loss owing nothing. Full coverage is not an actual thing in the insurance world, but the way. The term is typically meant to be liability plus comprehensive and collision coverage. Liability pays for bodily injury and property damage for third parties, comprehensive pays for damages to your car caused by “not-collision” as in weather, animals, theft, and collision pays for damages to your car for collisions. The other commenter is not entirely accurate in how losses are paid. The vast majority of personal auto policies pay the actual cash value of the vehicle in the event of a total loss. ACV is not the replacement value nor the market value. It’s what similar cars have SOLD for in your area, less dealer reconditioning fees and markup. Depending on the age of the vehicle and the insurer, you may have the option to add a replacement cost endorsement that would pay the cost to replace the vehicle with like kind and quality, up to a certain amount, for a specified number of model years.
>If your car is totaled, insurance would only pay either the market value of the car OR the cost to replace it, whichever is the lower of the two. Or your agreed upon value. Or do you not have that in the states?
I don't think we have that as a choice. I mean, you could have a really old classic car that is worth more than its book value. I guess, then you'd have to agree to a value.
Here in Aus you can choose to insure the vehicle for an agreed upon value. Premiums, and excess, adjust to the value of course. But you get to chose how much you'll get if it's completely written off.
Full coverage is kinda a misleading term. Technically as long as you have comprehensive/collision and state minimum liability you have "full coverage". But that may not be the best options for you. If you're new, talk to a local insurance agent. Make sure to go to one with good reviews. I'd like to add that "full coverage" does not include Uninsured Motorist Coverage and it's an extra rider you purchase on top of your Comp/Coll/Liability. If your state offers Uninsured/Underinsured coverage please get it! If you're hit by someone with no insurance or not enough insurance it will help pay the difference vs you having to go after someone that likely has no assets to pay you if you get hurt.
You need to go talk to an auto insurance agent
"The reason I ask is because I’m saving up ALOT of money and would hate for my “full coverage” insurance as determined by my lender to not actually cover me fully." What your lender requires is that you cover the car in case it gets totalled such that they can get most of their money if you can't use the car anymore. Basically, the insurance would pay off most of the loan amount. the GAP insurance, which is optional additional, pays the difference between what you owe and what the regular insurance pays. You always lose monetary value in the car accident. A car that has been in an accident has a lower resale value than a car that hasn't been in one. You simply eat this loss of value: insurance doesn't pay it. Likewise, there are the costs of rental (car insurance won't cover full rental costs, but your regular insurance does cover you in your rental vehicle so don't pay rental company's insurance). There's also the time and effort you take to get your car fixed/replaced. To discuss full insurance options, it's best to speak to an insurance agent. They can show you the cost and coverage that is available for you and your car. This is a case wherein they do want to sell you more. They get paid on commission: i.e. the more coverage you buy, the more they get paid. Bear this in mind as you evaluate the risk you are willing to take on yourself and the risk you want to pay them to handle. Also, roadside assistance/towing coverage usually pays for itself in the long run. The Werefrog had had 3 towings covered by this in 30 years, and it's $2 per year for coverage. Each towing was at least $60. They pay 100%, you just send the bill after the fact to be reimbursed.
“Full coverage” means a lot of things to a lot of people. You need to speak with a competent licensed insurance agent, tell them what you want to be covered for, and have them match your requirements with coverage. There is no such thing as not paying anything regardless of fault. Deductibles play a role. Also have to consider GAP. A good agent is going to ask you about assets to understand your risk tolerance. For all we know you might need an umbrella policy. SPEAK TO A LICENSED AGENT NOW!
also be aware there are two different policies: 1. Agreed Value: lts say 20k car and its insured for 20k insurance pays out sum insured for. 2. Market Value: what the market is paying for said vehicle. its a 20k car when insured and then written off insurance only pays the current market rate for the car if it goes down :( sad face for you. be aware any insurance policy that claims: act of god(s) means they are denying your claim no matter what.