RIGHT AND DUTIES FOR FULL COVERAGE:

FULL COVERAGE

Full coverage is the term commonly used to refer to the combination of comprehensive and collision coverages (liability is generally also implied.) The term full coverage is actually a misnomer because, even within traditional “full coverage” insurance, there are many different types of coverage, and many optional amounts of each. “Full coverage” is a layman’s misnomer that often results in drivers and vehicle owners being woefully underinsured. Most responsible insurance agents or brokers do not use this term when working with their clients.

Most financial lenders in the United States require the financed vehicle to have collision coverage, and not just liability coverage, in order for the financial institution to cover their losses in case of an accident. Insurance requirements vary between financial institutions and each state. Minimum deductibles and liability limits (required by some leasing companies) would be outlined in the loan contract. Failure to carry the required coverages may lead to the lienholder purchasing insurance and adding the cost to the monthly payments or repossession of the vehicle. Vehicles purchased with cash or paid off by the owner are generally required to only carry liability. In some cases, vehicles financed through a “buy-here-pay-here” car dealership—in which the consumer (generally those with poor credit) finances a car and pays the dealer directly without a bank—may require comprehensive and collision depending on the amount owed for the vehicle.

Collision

Collision coverage provides coverage for vehicles involved in collisions. Collision coverage is subject to a deductible. This coverage is designed to provide payments to repair the damaged vehicle, or payment of the cash value of the vehicle if it is not repairable or totaled. Collision coverage is optional, however if you plan on financing a car or taking a car loan, the lender will usually insist you carry collision for the finance term or until the car is paid off. Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) is the term used by rental car companies for collision coverage.

Impact with a pedestrian has been ruled in prior court cases as a collision with an object and is considered a collision claim.

Comprehensive

Comprehensive coverage, also known as other-than-collision coverage, is subject to a deductible and covers cars damaged by incidents that are not considered collisions. For example, fire, theft (or attempted theft), vandalism, damage from weather such as wind or hail, or impacts with non-human animals are types of comprehensive losses.

Additionally, a few insurance companies list “Acts of God” as an aspect of comprehensive coverage, although this is an old term that is not ordinarily used today. By definition, it includes any events or occurrences that are beyond human control. For example, a tornado, flood, hurricane, or hail storm would fall under this category.

While etymologically all living creatures are considered animals, impact with a human is excluded from the definition of “animal” under insurance definitions. In McKay v. State Farm Mutual Automobile Insurance Co., 933 F. Supp 635, (S.D.Tex., 1995), the insured’s claim was denied for the incident in which an intoxicated pedestrian ran into the side of their vehicle on the freeway. Legally, animals are defined as ““all animal life other than humans and signifies an inferior or irrational sentient being, generally, though not necessarily, possessed of the power of self-motion.

Uninsured/underinsured motorist coverage

Uninsured/Underinsured coverage, also known as UM/UIM, provides coverage if an at-fault party either does not have insurance, or does not have enough insurance. In effect, the insurance company pays the insured medical bills, then would subrogate from the at fault party. This coverage is often overlooked and very important. In Colorado, for example, it was estimated in 2009 that 15% of drivers were uninsured. Usually the limits match the liability limits. Some insurance companies do offer UM/UIM in an umbrella policy.

Some states maintain unsatisfied judgment funds to provide compensation to those who cannot collect damages from uninsured driver.Typically, the payout is not more than the minimum liability limits and the negligent driver remains responsible for reimbursing the state’s fund.

In the United States, the definition of an uninsured/underinsured motorist, and corresponding coverages, are set by state laws. In some states it is mandatory. In the case of underinsured coverage, two different triggers apply: a damages trigger which is based on whether the limits are insufficient to cover the injured party’s damages, and a limits trigger which applies when the limits are less than the injured party’s limits. According to a 2009 survey by trade association Property Casualty Insurers Association of America, 29 states have a limits trigger while 20 states have a damages trigger. Another variation is whether a particular state requires stacking of policy limits of different vehicles or policies.

Loss of use

Loss of use coverage, also known as rental coverage, provides reimbursement for rental expenses associated with having an insured vehicle repaired due to a covered loss.

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