When you call to place insurance on a vehicle you recently obtained, have you ever said, “I want full coverage on this car?” Every day at our office in Bellbrook, Ohio we receive calls for new auto insurance and sometimes we ask the question, “Do you need full coverage?” Most people understand this to mean, “Do you want to protect your car in case it’s damaged in a claim or do you only need to protect other cars that are damaged and other drivers or passengers who are injured?” But it’s really much more than that.
Full Coverage can actually mean a number of different things. All auto insurance policies must carry some level of liability protection for other cars and other persons. Most policies also include UM/UIM and Medical (see below). From there, you can add additional features like Comprehensive, Collision, Towing, and Rental Reimbursement to create a package that is often referred to as “Full Coverage.”
Of course, even within these various coverage areas there are certain limits. Liability, uninsured motorist, and medical all have dollar limitations. They will provide coverage up to a certain amount stated in your policy. Towing coverage may have a dollar limit or a distance limit. Rental coverage usually has a per-day limit and a maximum number of days where coverage is provided. Comprehensive and Collision coverages usually come with a certain deductible to be applied in case of a claim.
Most of us are familiar with the concept of a deductible. If I have an accident where I am at fault, and I have a collision deductible of $500, then that’s the amount I will need to pay and my insurance will cover the rest. (If the driver of the other car was at fault, then I should not have to pay a deductible.) The same holds true with a deductible for a comprehensive claim.
Many people in Bellbrook, Ohio ask what is a comprehensive claim? Basically, it’s damage to your car resulting from something other than your actions or another driver’s actions. If your vehicle is damaged or destroyed by fire, storm, theft, or vandalism it’s considered a comprehensive claim. (If a deer or other animal collides with your car while you are driving, this is also considered a comprehensive claim. See our post on “What If…I hit a deer?”)
Sometimes we hear the response, “No, I don’t want full coverage; I only need liability for this vehicle.” That’s often the case if the car to be insured is over 10 years old and valued at less than $2,000. However, this is not a very accurate way to describe the coverage needed for older vehicles. You usually need more than just liability coverage.
Even with an older vehicle, you should still consider carrying “Uninsured and Underinsured Motorist” protection. This provides coverage in case you or your passengers are injured in an accident where the other driver is at fault and does not have insurance or does not have enough insurance. You can also include “Uninsured Motorist Property Damage” if you do not carry collision coverage. This will provide a limited amount of coverage to repair your vehicle if the other driver is at fault and is uninsured. You may want to still keep comprehensive coverage in case you experience hail damage or some other calamity that is out of your control.
Then there’s “Medical Pay” coverage for you or your passengers to provide reimbursement for medical expenses even if you are the one at fault in an accident. And don’t forget to add “Towing and Roadside Assistance”. With Farmers HelpPoint, you are just a phone call away from someone coming out to charge your battery, bring fuel if you run out of gas, change a flat tire, get your keys out of your locked car, or tow your vehicle to a safe place for repairs.
When our clients request Full Coverage we try to clarify whether they need to include Rental Reimbursement. This coverage provides for a rental car while your vehicle is in the body shop for repairs due to a claim. Farmers Insurance offers a unique coverage that goes beyond simply reimbursing the cost of a rental car. It’s called “Loss of Use” protection and it provides either $25 per day or $50 per day paid directly to you when your car is in the shop due to a claim (the amount per day depends on the coverage you select with your policy). The great thing is, this money is yours even if you don’t need a rental car! Now that’s a tremendous value!
Finally, what if your car is totaled? If I have Full Coverage does that mean my car will be replaced? Not necessarily. There’s a rather complicated formula for determining the current value of your car. (See our post on WHAT IF…my car is totaled?) However, if you purchase a brand new car, you can add “New Car Replacement” coverage to your policy. This will guarantee the replacement of your car with a brand new model if yours is totaled within the first two years.
So…how “full” is Full Coverage? It all depends on what you select when you start your auto insurance policy. Ask for more details the next time you meet with us here at the Greg Davis Agency in Bellbrook, Ohio.