The difference between Full Coverage and Public Liability and Property Damage (PLPD) is coverage to repair your vehicle if you are involved in a covered loss. If you have only PLPD, your insurance company will never pay you anything for damage to your vehicle. Full coverage includes coverage for your vehicle and everything included in PLPD. It has more coverage and is on the average about double the cost of PLPD. A general rule is when the value of your vehicle drops to about $2000 (this amount varies somewhat based on your income), you should no longer keep Full Coverage on it. The additional cost for the insurance over multiple renewals by carrying Full Coverage would not be justified.
Whether you have Full Coverage or PLPD, everyone needs mini-tort or Limited Property Damage Coverage on their Auto Insurance Policy. This coverage usually costs less than $10.00 per vehicle every 6 months. It is the most common claim. In a No-Fault State such as Michigan, you can be held responsible for the other parties Collision deductible or a statutory limit ($1000 in Michigan) in the case of PLPD, if you are at-fault in an accident. This coverage pays the entire amount for which you are legally liable up to that statutory limit. Everyone needs this coverage on their Car Insurance Policy.
A way to significantly reduce the cost of your insurance is to increase your deductibles.
1. For Auto Insurance, deductibles apply only if you have Full Coverage. Your Comprehensive (Comp) Coverage, which covers damage to your car other than a collision, and your Collision Coverage carry separate deductibles which do not have to be the same. Usual levels are $250 for Comp and $500 for Collision but levels up to $1000 and even higher may be possible depending upon your insurance company. Your increased payout if you select higher deductibles can be mitigated by coverages such as Full Glass (no deductible if you break a window) and Broad Form Collision (you pay your deductible only if you are at-fault in the accident). These are low cost options so you generally can save money by selecting higher deductibles and these two coverage options.
2. For Homeowners Insurance, your building and contents coverage usually carry a common deductible. $500 is a usual level but much higher ones are available, all the way up to $10,000 in many cases. The higher the deductible, the lower the cost of the insurance.
3. When is the last time you had to pay a deductible? If it’s been a long time, think of the money you would have saved by selecting a higher one.
4. Call your agent to see how much you can save by increasing your deductibles.
For Auto and Home policies, there are a few discounts that have a great impact upon their cost.
1. Multi-policy discounts (having the same insurance company for your Auto and Home policies) reduce premiums on both policies in the range of 5 – 20%. If you don’t own a home, buying a renters policy also qualifies for this discount.
2. Insurance Score (based upon your Credit Score from one of the three main Credit Rating Companies) can also impact your insurance premiums by 20% or more. Progressive Insurance did a study many years ago and showed a very strong correlation between a person’s credit rating and their frequency of claims. Many other insurance companies have since confirmed this correlation. Almost all companies now include your credit as a rating factor. Establishing and maintaining good credit will substantially reduce your insurance costs.
3. Maintaining prior insurance before shopping for a new policy is a huge factor in getting competitive pricing.
4. Claims free discounts and good driving records also qualify you for substantial discounts.
Both Renters Insurance Policies and Homeowners Policies cover damage to your owned property and your personal liability. They exclude coverage for vehicles and a few other items that are covered on other policy types. I can think of only one situation when you would not need either of these policies: If you are a young student going to school and living in a dorm. In this case, you are usually covered on your parent’s Homeowners Policy through an extension of coverage. Renters Policies cover your Personal Property (Contents) for certain Causes of Loss and Personal Liability. A Homeowners Policy adds coverage for a dwelling in which you own and reside. If you do not own a home but pay rent, you should have a Renters Policy to cover your Personal Property (TV and electronics, furniture, clothing, etc.) and your Personal Liability. In most cases, this will give you a multi-policy discount reducing the cost of your car insurance. Sometimes, this savings can be so great that it pays for the Renters Insurance.
Property Insurance pays YOU for damage to covered property caused by a covered Cause of Loss. Liability Insurance always pays SOMEONE ELSE for Property Damage or Bodily Injury for which you are legally liable. Many policies combine both of these coverages – Homeowners, Renters Insurance, Car Insurance (assuming you have Full Coverage) and many Business Insurance Policies. Some policies cover only one type of Insurance. An example of only Property Coverage is an Inland Marine Policy (Jewelry Floater is one type of these), and of only Liability Coverage is a Personal or Commercial Umbrella Policy.