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Everything About Coverage levels
By buying auto insurance, depending on the type of coverage purchased, the consumer may be protected against:
- The cost of repairing the vehicle following an accident
- The cost of purchasing a new vehicle if it is stolen or damaged beyond economic repair
- Legal liability claims against the driver or owner of the vehicle following the vehicle causing damage or injury to a third party.
There are different coverage levels. Liability insurance covers only the last point, while comprehensive insurance covers all three. Even comprehensive insurance, however, doesn't fully cover the risk associated with buying a new car. Due to the sharp decline in value immediately following purchase, there is generally a period in which the remaining car payments exceed the compensation the insurer will pay for a "totaled" (destroyed, or written-off) vehicle. In some countries including New Zealand and Australia market structures mean that people are more likely to buy a nearly new car than a new car so this is less of a problem.
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