As an insurance agent, one of the questions I am asked most often is “do I need full coverage?”
First, let’s talk about full coverage. It’s a common thought that full coverage means fully protected. However, that’s not true. Your liability limits represent the protection you have against bodily injury and property damage. You will carry those limits whether you have full coverage or liability only. A great resource for understanding your coverages would be to go here to a post we previously issued explaining auto insurance policy language.
When your agent refers to full coverage, they’re referring to collision and comprehensive (aka- other than collision) coverages. These are the two coverages required by your lender if you have a loan on your vehicle. Comprehensive coverage is for theft of your car, fire, hail, glass breakage, or hitting an animal. Collison is for your vehicle if you hit someone else, a fence, telephone pole, building, etc.
These two coverages are the main and most costly component of “full coverage”. Other options that are offered with full coverage are rental reimbursement and towing & labor / roadside assistance. Neither of these coverages are required by law or a lender, and are usually very inexpensive.
When someone asks if they need full coverage, my response is always to ask a few questions. First, if you caused damage to or totaled your vehicle, do you have the means to repair or replace it completely out of your own pocket? Second, have you looked up the value of your vehicle? For example, if you have an older car and it’s valued at $2,000 and you have a $1,000 deductible, is it worth paying say $400 per year for collision and when a loss occurs also paying the $1,000 deductible? Or, would you be better off putting that $400 in savings each year so you have the money to replace your vehicle if that were to happen?
Hopefully you can see here, full coverage is not one size fits all. There are several factors to take into consideration when making the personal choice for each individual vehicle you own. If you have questions regarding full coverage, you can always reach out to an agent in our office. We strive to provide great service and as much education as we can to our clients, so they are prepared if and when they need to use their insurance.