"I want 'full coverage' auto insurance!"

Exploring the “full coverage” myth

When people contact us for a quote on their auto insurance, they frequently ask for “full coverage.”   What they don’t realize is that there’s no industry-wide standard for “full coverage.”  That’s something that customers come up with.  Let’s take a look at the coverages that are available.

  • Liablity coverage pays medical expenses for passengers in a vehicle that you hit, as well as property damage that you cause. This is the minimum coverage that the state requires.
  • Comprehensive & collision covers physical damage to your vehicle.  Let’s say you wake up in the morning to find that vandals have broken your car window overnight.  This would fall under comprehensive coverage.  If you drove your vehicle into a telephone pole, fence, other vehicle, et cetera, your car would be covered under the collision part of your policy.  Both of these coverages usually have a deductible associated with them, and will probably be required by your lender if you’ve financed the vehicle.
  • Uninsured Motorist (UIM) covers your vehicle and your medical bills if someone else hits your vehicle and either does not have insurance or doesn’t have sufficient insurance to cover damages.  If you carry 25/50/25 UIM coverage, you’d be able to receive up to $25,000 per person, up to $50,000 per occurrence for medical expenses for you and your passengers, and $25,000 for property damage to your vehicle if someone else hits you.  You’d file a claim on your own policy for UIM benefits after filing on the other person’s liability coverage.
  • Personal Injury Protection (PIP) covers medical payments and a portion of lost income for passengers in your vehicle.
  • Towing & Labor pays for the cost of towing your vehicle if it can’t be driven, as well as labor costs incurred at the site, such as having a tired changed.
  • Rental Reimbursement pays for a rental vehicle if your car is stolen or damaged by something your policy covers.

 So as you can see, there are a lot of different coverages to choose from. You could have two different people with two different coverages who both consider their policies to have “full coverage,” and both of them could be wrong.

You see, for as many different types of coverages there are, there are many different levels of coverage for each type. You could carry 50/100/50 liability coverage and 25/50/25 UIM coverage with a $1000 comp & collision deductible. Or you could have 100/300/100 liability and 100/300/100 UIM without comp & collision. Or you could have 25/50/25 liability with a $500 comp & collision deductible. The combinations are too many to count.

So the next time you contact an agent for an auto quote, have an idea in your mind of what “full coverage” means, and be ready to tell the agent exactly what kind(s) of coverage you’re looking for. Your agent will be thankful!

Edited to add:  Progressive now has a great article reaffirming what I wrote.  You can check it out here.