What is Full Coverage Auto Insurance and Do I Need It?

“Full Coverage Auto Insurance” is a term people often state they want when discussing their auto coverage.  Full coverage is a misnomer when it comes to auto insurance, because the auto policy is not design to cover all risks that an auto owner may experience.  The following are a few FAQs you should know about your auto insurance coverage:

1.      What does full coverage in auto insurance actually mean?  Full coverage auto insurance generally means that the policy covers Bodily Injury and Property Damage (aka, Liability) and Physical Damage (aka, Comprehensive and Collision).  All other coverage options on the auto policy are optional.

2.      When do I need to have full coverage?  Full coverage is required by most banks when there is a lien on the vehicle (e.g. the car is financed).  Also, Liability coverage is mandatory in most states, so that coverage is required. 

3.      Is rental car coverage and roadside assistance included on all auto policies?  No.  Rental car coverage and roadside assistance are optional coverages. 

4.      When should I drop physical damage coverage from my policy?  I counsel clients to consider dropping physical damage from their auto policy when their vehicles approach 12-15 years of age.  Most likely, the vehicle won’t have a lien on it at that age.  Also, the market value of the vehicle may not be enough to justify the cost of the coverage. 

5.      Is Uninsured/Underinsured Motoristcoverage good to have on my policy?  The Insurance Information Institute completed a study in 2012 that estimates 12.6% of drivers in the United States are uninsured.  I counsel my clients to consider this coverage because it addresses the risk of being injured by an uninsured driver. 

  

If you have additional questions regarding your coverage choices and how it affects your auto insurance premium, please stop by my offices in McKinney, Texas or give me a call at (972) 727-9111.

Stan Polk, CPCU – Agency Owner

6951 Virginia Parkway, Suite 316

McKinney, Texas 75071