Full coverage car insurance is understood vaguely by most people, but what it encompasses specifically can get elusive. Some people even claim that there’s no such thing as full coverage. So what is full coverage auto insurance, and under what circumstances is it a better deal than less comprehensive policies? Let’s find out.
A full coverage auto insurance policy contains three types of coverage: liability, collision and comprehensive. Liability, which is legally required in most states before a vehicle registration is issued or renewed, pays the costs for any physical property damage or medical expenses if you lose in a car accident lawsuit. Collision insurance pays for any damages to your car.
Comprehensive, unlike collision, is not limited to repairs from accidents; it reimburses you for theft, fire damage, vandalism, and any other damages that didn’t result from driver negligence or maintenance issues. If your car is totaled, comprehensive insurance will reimburse you for any necessary car rentals. It also provides 24-hour roadside assistance.
Full coverage takes these features a step further, not only covering damage to your vehicle, but bodily injury expenses for you and your passengers. Even if you’re driving someone else’s car, you and your passengers are covered. This offers excellent protection for families, even if other cars in the household only have liability insurance.
You’re also protected from uninsured and under-insured motorists-a provision known as UM/UIM coverage. Unlike an uninsured motorist, who doesn’t even have liability insurance, an under-insured motorist as a lower limit than your own policy. Full coverage will pay the difference. Incidentally, uninsured and under-insured drivers are often at a disadvantage when filing a car accident injury claim against you. If the evidence is unclear which party at primarily at fault in a court of law, a judge will usually take the person with full coverage car insurance more seriously.
Despite the terminology, “full” coverage does have limits. On a leased car, for instance, where the dealer usually requires the driver to get a full policy, the standard requirement is 100/300, where the numbers indicate thousand-dollar increments: $100,000 for each person, and $300,000 for the accident.
A full policy also doesn’t pay for maintenance repairs. If your tire blows out, your insurance won’t pay for it, but if it’s blown out in the course of an accident, it qualifies for reimbursement. Also, bear in mind that your policy will generally only pay for the fair market value of the car, so if you’re financing the car, then it may not actually pay off the balance of lien, due to depreciation (or simply an alternative valuation). Used cars and classic cars are often not an ideal match for full coverage, since depreciation is factored in more aggressively, even when, in the case of classic motor cars, depreciation shouldn’t be a factor at all. If you have a collectible vehicle, there are better ways to get cheap motor insurance.