What is Full Coverage Auto Insurance?
Personal auto insurance policies are broken down into two main types of coverage, liability and physical damage.
You are said to have “full coverage” when you purchase both for any one vehicle.
The argument could also be made that you need to purchase uninsured and underinsured motorist coverage as well to be truly “fully covered,” but it depends on who you ask.
Liability insurance is currently mandatory in most states. This coverage type pays for bodily injury and property damage you cause to other people.
For example, if you have a liability-only insurance and cause an accident that injures someone else and damages their car, your insurance company will pay for the damages up to you policy liability limits.
At the same time, liability-only would not pay for any damage you cause to your own car. You’d be out of luck.
This is where “full coverage” comes into play. You would need physical damage coverage in addition to your liability coverage in order to repair your own vehicle.
With physical damage coverage in place, the repairs would be covered regardless of whether or not the accident was your fault.
Physical damage coverage is further broken down into collision and comprehensive coverage, or “other than collision” coverage.
In our example, your collision coverage would be triggered by the resulting claim.
The scenario described above is a great argument for purchasing full coverage for your vehicle, assuming it makes sense.
If you are in a position where your car isn’t worth very much money, or in a position where buying a new car would be easier for you than making repairs if your current vehicle were to be totaled, you may opt not to purchase physical damage.
See: should I buy collision coverage on an older car?
Contact your independent agent or insurer if you are not sure about your current coverage, or want to make changes as a result of reading this article.
