How does full coverage work? What does it cover? It turns out there is no such thing as full coverage
You have probably heard the term in many instances but do you know what full coverage insurance actually means? The definition can differ significantly depending on who you ask. We're here to clear this up in black and white so you can shop smarter.
Demystifying Full Coverage
Let's get something clear right off the bat: there is no such thing as full coverage when it comes to your auto insurance policy. I'm sure you are probably throwing your hands up and giving an incredulous look at that statement, but follow me. More than likely you have heard the terms liability and full coverage hundreds of times to describe two types of auto insurance policies, but the truth is that full coverage is just another way of saying that you need a policy with comprehensive and collision.
The reason that full coverage is confusing and why folks in the insurance world try not to use this term is because it does not describe any specific set of coverage. It's a broad term and means different things to different people. If you tell your agent you want a full coverage policy, then chances are they will ask you about specific coverage that you want included or not included.
What Does Full Coverage Mean?
Essentially, full coverage insurance describes comprehensive and collision. Comprehensive and Collision coverage protects your vehicle in the event that it is damaged after you pay your deductible. The higher your deductible the less likely you are to file a claim, so your insurance carrier will offer a lower rate. The opposite is true for a lower deductible. These coverages are commonly purchased together, but it is important to know that they are separate and cover two different things.
From an Agent's standpoint, when a consumer asks for a full coverage policy they want at least:
- The legally required minimum coverage for their particular state (Liability coverage plus anything else required by the state)
- Comprehensive Coverage
- Collision Coverage
Any other coverage is going to be considered optional, so don't assume that saying "full coverage" will include everything that you might want.
What Does Full Coverage Not Mean?
Since full coverage doesn’t describe any specifics, you may not be getting coverage that is available to you on a normal insurance plan, such as:
- Uninsured Motorist Coverage (unless it is legally required in your state)
- Medical or PIP Coverage (unless it is legally required in your state)
- Optional Death Benefit (only available in certain states)
- Custom Parts and Equipment Coverage (availability and amount varies by company)
- Rental Car Reimbursement
- Roadside Assistance/Towing and Labor
Being specific about what coverage you want (and don’t want) is important to discuss with your agent to avoid gaps in your policy. If you assumed that full coverage includes roadside assistance then you may be surprised when you are having to foot the bill for a tow or flat tire change.
As an insured you are always bound by the terms, coverage, and limits of your policy regardless of your request for “full coverage”, so be specific. A good agent will probe to find out what it is that you want and don’t want on your policy, but a smart shopper won’t leave something this important up to assumptions.
**Disclaimer** Even though the term "full coverage" car insurance doesn't actually exist, we will be answering the FAQ section assuming full coverage means comprehensive and collision.
Do I need full coverage on a financed car?
Most banks and auto lending companies will require that the vehicle be insured against physical damage for the duration of your loan term. In most cases, you have to carry full coverage while you are still making payments on your auto loan.
Can I get full coverage on a salvaged title vehicle?
Having a vehicle with a salvaged title does not automatically disqualify you from getting full coverage on it. Certain companies will not insure the vehicle, but there are plenty of companies that will so be sure to check with your current provider. Keep in mind insurance companies that will insure a salvaged title vehicle will most likely charge an additional fee and the actual cash value of your car will be much lower since it has already been totaled once before.
What is the difference in Liability vs Full Coverage?
Liability coverage is third party insurance that pays for injury and damage that you cause to another driver, their passengers, and their vehicle. Full coverage will include liability and also comprehensive and collision coverage at the very least.
How much is Full Coverage?
The cost of full coverage varies widely depending on a number of factors such as age, vehicle, and location. See quotes from hundreds of car insurance companies in seconds at TheZebra.com.