Why “Full Coverage” Insurance Doesn’t Actually Exist

“I thought I had full coverage, why isn’t this covered?”

“I need full coverage because I’m financing my car.”

These are things that I have heard time and time again from my clients and prospective clients here at ANR Insurance Group. I think it’s time that we get into detail about what that “full coverage” insurance the bank you’re financing your car through wants you to carry, and why it doesn’t cover everything. Let’s get back to the basics of insurance to start things off.

Liability Insurance, it’s required by law in all 50 states that for a vehicle to be driven it must have liability coverage. The dollar amount required varies from state to state, but what does it cover? While the coverages can vary slightly at a minimum all states require that you carry:

  • Bodily Injury – This coverage protects your financial interest in the event you injure another party in an accident. This is the part of your policy that pays that other party for their medical bills and related expenses. Due to the high cost of medical care, it’s dangerous to carry liability limits that are too low. This is something we can help you decide on.
  • Property Damage – Suppose you damage someones car in an accident, or a guard rail, house, or some other property that belongs to someone else. This is the part of your policy that compensates the other person for that damage

Other coverages that are sometimes required by law to carry (depending on the state) include:

  • Uninsured or Underinsured Motorist – this will pay for injury to you and damages to your vehicle, up to your policy limit, if someone else causes and accident and they do not carry insurance.
  • Personal Injury Protection – this covers your medical expenses and can also cover lost wages following an accident, regardless of who was at fault in the accident.

When full coverage is requested it is a combination of liability insurance, comprehensive, and collision.

  • Collision – this pays for damages to your vehicle following an accident.
  • Comprehensive – this pays for things like vandalism, theft, windshield cracks, and other damages that don’t result from an accident.

Here’s why it’s important to go through your insurance with your agent and understand what you’re paying for. Even if you feel secure thinking that you have “full coverage” insurance there’s a long list of things that could fall outside of your insurance coverage that you would be responsible for.

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  • Uninsured Motorist – I know I mentioned it above, but not all states require that this coverage be carried. If your policy is missing this, you could be left with costly medical bills and car damages if someone without insurance hits you. This coverage pays you, in the event that you are injured by another party, and that other party was either unidentified, or they weren’t carrying a high enough limit of Bodily Injury Liability to cover your expenses. This is also a very important part of your auto policy because you have zero control over how much insurance other people are driving around with.
  • Medical Payments – If personal injury protection or medical payments coverage isn’t required in your state will you be able to pay for immediate medical expenses following an accident while the claim is being settled?
  • Emergency Roadside Service – Just because you have full coverage does not mean your policy will cover you if you have an emergency like a flat tire or a dead battery and need a tow. You need to add on this coverage.
  • Car Rental – Do you feel comfortable paying for a rental car out of pocket in the event of an accident?
  • Damages Higher Than Policy Limits – If your state only requires that you carry bodily injury in the minimum amount of $25,000 and you cause an accident where the medical bills of the person are $70,000 you could be held liable for that extra $45,000. Your insurance company will only pay up to the amount your policy covers.

Insurance is not one size fits all, the best way to figure out if you are covered to fit your unique situation is to sit down with your agent and review your policy. Hope this helps and if you’d like to get a custom quote with one of our agents please visit our scheduling page!

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