Do you know the difference in coverages for your auto policy?
What is Full Coverage?
Is there a definition for Full Coverage in an auto policy. This may come as a surprise to a lot of folks, but the answer is no. Full coverage to one person may mean something different than it does to someone else. For example, a particular insurance company may offer a coverage that another doesn’t. Just as likely is a company may provide a coverage in one state but it hasn’t been approved in another.
To illustrate, let’s assume an individual heard the term full coverage while purchasing their auto coverage in Wisconsin. This individual recently moved to Georgia and is seeking this same “full coverage” with the same company. However, this coverage isn’t available in Georgia. The agent doesn’t think to address the topic because it isn’t a Georgia coverage. The applicant didn’t bring it up either….remember, they are simply asking for “full coverage” and think accident forgiveness is included.
Most insurance professionals however, fall into the habit of saying “Full Coverage” and they shouldn’t.
When you buy auto insurance, the three main coverages are Comprehensive, Collision and Liability, often times referred to as full coverage.
Comprehensive and Collision are for damage to your vehicle. We will address these topics in greater detail in another discussion. The liability is for the damage or injury you cause another person and/or their property.
You can also add towing, rental car reimbursement, loan or lease gap along with other things like accident forgiveness and the list goes on. Each coverage has a premium associated with it so prioritize. In other words, if the car is financed, you must carry Comprehensive and Collision coverages. The state in which the vehicle is registered requires the liability. Anything after that is optional.
For those worried about not having a vehicle to get back and forth to work while the car is in for repair, due to an at fault accident, should purchase rental car reimbursement. Always remember, this coverage is for accidents caused by the individual owning the vehicle. If the accident is the other guys fault, his or her insurance will cover the rental car cost while yours is repaired. Rental car coverage only engages when the vehicle is being repaired for a Comprehensive or Collision loss.
A rental car is not provided by your insurance company for mechanical breakdowns.
So be a proactive consumer. Share your coverages with a prospective new agent. Ask questions and learn as much as you can.
Joe