Full Coverage VS Liability-Only

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When you purchase auto insurance then you may be given an option of getting either just liability or full coverage. In most provinces it is mandatory as per law to have liability insurance but why would you pay more and purchase full coverage too? You may wonder whether your insurance broker is trying to make some commission by selling you more coverage. Well, to get full coverage may be the best option for your peace of mind as per your situation and affordability. When you decide to buy just liability insurance you may not have other optional coverage and damages due to collision or other perils.

What Is Liability Only Insurance

In various provinces, there is a basic standard liability coverage limit that all motorists have to carry. In Ontario, the limit is $200000 and this covers third party liability due to a collision. It is always recommended to get more coverage up to $1 million or $2 million. For example, in case you are in a collision at- fault with another car then many people could be injured that increases injury expenses. If you have only the minimum liability coverage, that may not suffice to cover all the expenses. Then when the other party sues you for all the damages then you may even risk losing your assets as per court order. Your liability coverage helps you and your family stay protected against huge financial losses. The cost of liability coverage is inexpensive when you compare it to the benefit and protection you get against third party liability.

What Is Full Coverage Insurance

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At the time you purchase your car insurance policy you may buy optional coverage too. The most common optional coverage that you may add to your policy is the collision and comprehensive. Then there is specified perils and all perils coverage that you may add to your policy. When you have liability and optional coverage, that is full coverage.

Collision: You may claim for any damages due to a collision with an object or another car. This includes the cost of repairs or replacement of your car for the actual cash value.

Comprehensive: This coverage helps you to claim for any damages to your car that is not due to a collision. These include riots, fire, falling objects, theft, vandalism, flying objects etc.

All Perils: When you have collision and comprehensive coverage then that is also known as All Perils coverage. Even if someone who lives with you stole your car or a service mechanic drove away with your car you may claim.

Specified Perils: Under this coverage, you may specify the perils that you may wish to insure your car against. These include theft, fire, riots, and many others. This could also help you choose the level of coverage you need and can afford.

Should You Have Full Coverage or Basic Coverage

When you buy a car on finance or lease then they may ask you to buy collision and comprehensive coverage. The new car has a higher value and if there is damage then the replacement or repair is very expensive. So, if your car is new then it could be too costly to not have full coverage.

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