What does full coverage mean?
I have liability insurance, is that not enough? My lender says I need to add full coverage to my car. I don't know what that means.
“Most lenders require financed vehicles to have full coverage.
This means that the vehicle has both comprehensive insurance and collision insurance.
While liability car insurance covers damages that you do to other vehicles or people, it doesn’t cover your vehicle.
Comprehensive insurance covers your vehicle if it is damaged by something that isn’t a collision, such as:
- contact with an animal
- damage caused by weather
Collision insurance covers your vehicle when it is damaged by a collision.
Lenders require full coverage because comprehensive and collision insurance cover your vehicle regardless of fault.
Lenders want to ensure that their property is covered from damage. Without full coverage, it’s unlikely that financed vehicles would get repaired and lenders don’t want to take that risk.”
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