September 30, 2014
We're willing to bet "full coverage" means something different than you think it does.
It’s not hard to understand why there are so many common car insurance myths: Between the semi-legalese language of policies and the overly simplified messaging of billion dollar ad campaigns, the truth about car insurance can often get lost in the mix. We thought one of the most common myths was worth addressing in its own post: The “Full Coverage” myth.
If you call and ask an agent for “full coverage,” you won’t have to pay a penny in the event of an accident.
Though it sounds like it should be, full coverage isn’t actually an insurance term agents use. What most people mean when they say “full coverage” is, instead, comprehensive and collision coverage. Collision insurance covers just what it sounds like: damage to your vehicle in the event of an accident, whether that’s a fender bender or losing a fight to an icy road. Comprehensive insurance. on the other hand, covers damage to your vehicle in the event of all kinds of unexpected, non-accident types of blunders, including—but not limited to—weather damage, theft, and fire. If you want the full package—roadside assistance, personal injury protection, which covers the cost of medical bills for you and your passengers in the event of an accident, or uninsured motorist coverage, you’ll have to spell that out for your agent.
Plus, there’s the matter of a deductible: Remember you’ll pay that amount first, and then your coverage kicks in. So make sure that number is low enough that it won’t throw you into financial turmoil in the event of an accident.
How Much Coverage do you Need?
If you’re buying a financed vehicle, you’ll need comprehensive and collision in order to drive off the lot. “These two coverage options protect the vehicle from just about anything,” says licensed
Zebra insurance agent Jonathan Wagner. “But because things like roadside assistance or rental car reimbursement aren’t essential to protecting the vehicle, they aren’t necessarily included in ‘full coverage.'”
Need a quick way to remember what ‘full coverage’ really means? “I think it is best to think of full coverage as complete coverage for your vehicle, without any bells and whistles,” Wagner adds.
How Much we Don’t Know about Insurance
Still feeling confused? Don’t worry—you’re definitely not alone. In 2010, The National Association of Insurance Commissioners (NAIC ) found in a study that many, many Americans are confused about insurance facts and stats, too. Some of the things most of us don’t know:
- We don’t quite understand how our credit scores affect our insurance. “Americans admit to feeling the least knowledgeable regarding the role their credit scores play in determining insurance premiums—44 percent feel not very or not at all knowledgeable.”
We really don’t understand those pesky coverage limit numbers. “86 percent of Americans don’t know that, when their liability coverage is 100/300/100, the last figure represents the maximum amount that their insurance company will pay in property damage for an accident.”
We also don’t understand difference between types of insurance: “When it comes to property stolen from their car, nearly two-thirds of Americans (63 percent) don’t know personal property is covered by homeowners/renter’s insurance, not auto insurance.”
In their study. NAIC asked survey participants 10 insurance-related questions. On average, Americans answered a paltry four of those ten questions correctly.
The good news? Even if you forget all of this, you will not be the first customer your agent has ever heard ask for “full coverage.” Whether you’re comparing online or speaking to an agent, make sure you compare apples to apples when selecting insurance coverages—and if you don’t understand something, be sure to ask! It’s your coverage, and your money, after all.