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Comprehensive Car Insurance

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Comprehensive Car Insurance

Know the difference between comprehensive car insurance and liability coverage

Comprehensive car insurance is one of those types of car insurance that can be a little confusing to those who are new to the task of purchasing insurance for their vehicle. When I was younger and looking into insurance, I thought that "comprehensive auto insurance" meant that everything was covered; wrong.

I finally figured out the difference between liability insurance and comprehensive insurance. In most states, if you don't have a lien on your car you can get by with liability insurance that will cover the other guy should you be the responsible party in an accident. However, it does not cover your losses. So if you get in an accident that is your fault, and both cars are totaled, the other guy's loss will be covered by your insurance and you will find yourself walking to work.

This is one of the reasons why the minimum auto insurance required in most states is liability auto insurance. They want to make sure that the "victim" in a car accident is protected both financially and medically.

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However, if you are purchasing a vehicle and making monthly payments, you are usually required by the car loan company to carry comprehensive car insurance coverage. That will protect them and you, should you be involved in an accident and the vehicle is a loss. In fact, most insurance companies will notify your lender should you cancel your auto insurance.

One such lender and auto sales company removes the possibility of coverage being cancelled by requiring all those who purchase one of their vehicles to also purchase their comprehensive car insurance through their provider. The insurance premium is included in the car payment and the lender's interest in the vehicle is protected.

Unfortunately, for other drivers on the road, if you are involved in an accident with someone with this type of coverage, you could be in for a real shock. The driver is supposed to purchase liability insurance from a regular insurance provider, which is required to be legal in most states.

I learned the hard way that not all of them do purchase the required liability insurance. Instead when they are in an accident and have to provide proof of insurance they will present their "policy" from their lender. Then when the victim (in this case, me) attempts to file a claim against their "insurance provider" they learn that it is only comprehensive car insurance and only covers the car of the person who hit you.

They are in essence an uninsured motorist. So heads up, everybody. If you are involved in a car accident with someone who presents you with a DriveTime policy, make sure you ask for proof of liability insurance from a known insurance provider. If they cannot provide proof of insurance at the accident scene, then make sure the police know that they are not insured. Otherwise, you'll be filing a claim against your insurance, which will cause your own rates to go up.

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