Before I began my career in the Insurance Industry I knew nothing about car insurance except you had to have it. Growing up I had heard a few vocabulary terms which basically sounded like gibberish and I just thought, my parents are responsible they have it covered. I’m good, I’m sure I have full coverage. I just assumed I had full coverage, because when you are a young driver why wouldn’t your parents have full coverage on an expensive vehicle? And because I have full coverage I am covered for anything, right?
It wasn’t until I was an adult and working in the industry that I learned that full coverage wasn’t a real term to the insurance companies. Before I was licensed as an agent I would answer the phones and take down information for quotes, questions, changes etc. to pass onto the agents. The most common change I received was to add on or substitute a vehicle. When I would scroll through the list of questions I would hear 8 or 9 times out of 10 “I want full coverage”. Well on my list of items to ask, there was no full coverage check box.
Full coverage is not a true term in the insurance world. When we add your vehicle onto your policy there isn’t a button to click called “Full Coverage”. What does exist are the different coverage options that could make up that term. You see, each and every one of us will have a different definition of what we each think full coverage means. Many of us may say, “Ok I’ve purchased a vehicle and now I have full coverage on it. If anything happens my insurance company will take care of it.”
When you ask for full coverage, what you are really asking for is Physical Damage coverage aka Comprehensive and Collision Coverage. These two coverage options provide coverage towards the actual physical damage to your vehicle. Each coverage has a separate deductible and they do cover different things.
Comprehensive coverage is what will give your vehicle protection for any loss other than a collision. Some companies will list on your policy “Other than Collision” instead of Comprehensive. So when would I use comprehensive coverage? This coverage is for theft, fire, vandalism, a tree branch falling onto your parked vehicle or a rock hitting your windshield. Like the definition and the info graphic – anything other than an actual collision.
So, what does collision coverage mean? This coverage is when you are at fault in an accident and your vehicle is damaged. You would pay your deductible and the company would be responsible for the rest. These two coverage limits can be optional however they are required if you have a financed or a leased vehicle. The finance company may require a specific deductible so be sure to check with them just to be sure.
If you own your vehicle outright you have the option to decline these coverage options. This would mean your vehicle is covered just with liability which only provides bodily injury and property damage to the other party, up to your policy limits, when you are at fault in an accident. Woah! That was a lot of info let me try and break it down a little more. If you were at fault and your vehicle was damaged and you do not have collision coverage, then you would be responsible for making any repairs or replacements to your vehicle. However, if you are not at fault in an accident and your vehicle is damaged the other party would be responsible for paying for the damages and/or repairs.
Some of you ask us what our opinion is on vehicles that are older. “If my vehicle is a 1995 Toyota Camry should I have the physical damage coverage, it’s so old it may not be worth it!” If this is the case, where you have an older vehicle and it isn’t financed you may not want to have comprehensive and collision coverage. In this situation, you would need to consider a few things. What the value of the vehicle is; would it cost more to have those coverage options added to that vehicle than it would to replace the vehicle entirely; and could you replace this vehicle without the assistance of the insurance company if you have a total loss? Remember, I mentioned in my last post about how Insurance exists to protect you from financial hardship. Will you be in a state of financial hardship like this emoji if you had to replace a vehicle unexpectedly? These are the questions we will ask our customers because the decision is ultimately up to them. They also need to factor in the cost and if they can afford it, again “Will it be a financial hardship to replace a vehicle right now”? Luckily companies offer a range in deductible options to help even out the cost. Quick tip: The higher deductible you have, the lower the premium will be!
There are additional endorsements you can add onto the policy in addition to the comprehensive and collision such as rental, towing, glass, GAP etc. Every company offers different additional coverages so be sure to check with your specific company on all the additional endorsements you could add on. So, if you are one of those people who thinks “I have full coverage so everything is covered” you may want to look at your policy, or ASK YOUR AGENT. Check to make sure you have comprehensive and collision and see if you have any additional endorsements. Because if there is a loss and you assume you are covered, you’ll be wishing you checked your policy. Assumptions in your insurance are never a good thing. They can lead to you paying out of pocket for a loss that could have been covered. Don’t assume that your definition of full coverage is going to cover you, always look at your policy and call us to be sure. Winky face emoji.
American Diversified Insurance Services, Inc
A: 201 Natoma St Folsom, CA
P: (916)985-7500 F: (916)985-7302 T: (916)389-1820
E: firstname.lastname@example.org W: www.amerdiv.com