‘Full Coverage’, two words often stated very confidently with regards to auto insurance but should be very carefully avoided.  The truth is there really is no such thing as ‘full coverage’ and it is a term often misused that leaves a lot of room for misinterpretation. 

The fact is all policies have some limitations on what they will pay.  These limitations most commonly exist in the form of deductibles, policy limits, coverage exclusions, and confirmation that the claim is in fact a covered loss.  Therefore, the assumption ‘full coverage’ can leave the policy holder with a false sense of security and misunderstanding of what their policy is intended to pay.  It is possible for an agent, an insured, and an insurance company to all three have a different definition of what they believe ‘full coverage’ to mean.  So, before we break the habit of using the term ‘full coverage’, lets first break it down and examine what it is thought to represent. 

Where does the term ‘Full Coverage’ come from?

The existence of this phrase is likely blamed on the possibility of one carrying liability coverage only on their vehicle.  Often utilized for older vehicles where the cost to insure would be greater than the vehicle’s value, ‘Liability Only’ is when there is no Collision or Comprehensive coverage purchased the insured’s vehicle.  Translation:  if you smash into something, your policy is only going to pay for damages to the property you smashed into.  The cost of repairing or replacing your own car will not be covered by your policy if you have ‘Liability Only’.  Therefore, the notion of carrying ‘full coverage’ on your vehicle is thought to be obtained when carrying all three, Liability, Collision, and Comprehensive.   Now, lets take a deeper look at what these components actually cover.

A Deeper Look at the ‘Full Coverage’ Components

• Liability Coverage: Auto Liability coverage pays for damages you cause to others and is broken down into three parts:
  • Bodily Injury Per Person: the maximum your policy will pay for EACH injured person involved in an accident.
  • Bodily Injury Per Accident: the maximum your policy will pay in total for ALL injured persons involved in an accident.
  • Property Damage: the maximum your policy will pay for damage to the other people’s property a result of an accident, such as their car, home, business, or fence to name a few.

Liability coverage is mandatory in all 50 states as proof of financial responsibility for the abovementioned damages caused to others – in short, this is what keeps you legal on the roadways.  While each state has their own minimum liability limits required, Indiana currently requires minimum liability limits of $25,000/$50,000/$25,000.  What that figure means is by law, drivers in Indiana must carry (at minimum) $25,000 in Bodily Injury Coverage Per Person with a total of $50,000 in Bodily Injury Coverage Per Accident, and a minimum of $25,000 in Property Damage coverage. 

It is important to emphasize that simply because 25/50/25 is Indiana’s minimum, does not mean that is the recommendation.  ‘Minimum’ is also very misleading as it does not mean that is the MAXIMUM amount you can be held liable for.  These minimum coverages often don’t cover all of the damage caused in an accident.  What happens if damages caused or injuries sustained exceed the amount of coverage you have available on your automobile policy?  You can still be held financially responsible – accident and personal injury lawyers can go after your assets and future earnings for damages if your underlying limits are not enough to provide coverage for damages owed.  Please do not be overwhelmed with regards to exceeding coverage minimums and knowing what limit is appropriate for your family to carry.  Your insurance agent is more than happy to assist you in selecting adequate coverage personalized to your needs and also coverage to protect yourself against others who failed to meet the minimum requirements in Indiana, known as uninsured and underinsured motorists’ coverage.  Rest assured, we are here to help guide you on all of this!

• Collision Coverage: Unlike liability coverage covering the property of others, Collision is purchased to protect your owned vehicle listed on the insurance policy.  Collision is triggered in the event of an incident involving a collision with another vehicle.  Vehicles may both be in motion, one may be stopped, a parked and unoccupied vehicle may be struck by an unknown vehicle and that would still fall under collision coverage.  Collision incidents can be rated at-fault incidents or not-at-fault incidents and regardless of fault, your policy will pay for the repairs to your vehicle as the result of a covered loss.  Should a collision incident take place that you are not-at-fault for, you would have the option to go through the other driver’s insurance policy for damages if they have accepted liability or you could repair through your own policy and your insurance company would work with the at-fault carrier to recover.    
• Comprehensive Coverage: Similar to Collision, Comprehensive coverage is also purchased to protect your owned vehicle listed on the insurance policy.  Comprehensive coverage is often referred to as ‘Other Than Collision’ coverage.  For situations in which the damage is not accident related or involving another motor vehicle, the damage to your covered auto would be considered under comprehensive coverage.  Examples of typically covered comprehensive claims include – vandalism, falling objects like a tree or hail, theft, fire, incidents involving animals, so on and so forth.  Often, these types of covered losses are beyond the scope of what the insured can control.  Occasionally vehicle owners will choose to remove or reduce coverages from seasonal vehicles or automobiles that are not currently being driven.  It would not be advantageous to remove comprehensive coverage on a vehicle in storage or only driven seasonally as damage or theft could still occur. 

If not ‘Full Coverage’, then what?!

“Full coverage”, it’s quick, it’s easy, it’s confident, it rolls off the tongue, it almost even sounds a little prestigious to say.  If that isn’t the proper term, what should one use to describe their coverages then?  The best advice we can give is to fully understand your insurance coverages and what they will cover in the event of an accident.  Easier said than done you might be thinking, but the WalkerHughes team is here to help with that!  Our goal is to not simply sell a policy but to educate our customers on what exactly they are purchasing so they can relay their coverages with confidence.  So, the next time someone tells you they have “full coverage auto insurance”, you can shock them by responding that you have 500/250/500 liability limits, comprehensive and collision coverage with $500 deductibles, uninsured motorists, underinsured motorists, rental reimbursement, and roadside assistance.  After they pick their jaw off the ground in disbelief that you are that informed about your coverages, you can let them know your friends at WalkerHughes Insurance would be happy to help them out as well! 

Which brings me to this next question, have you heard about our charity of the quarter?!  If you have a friend or family member that you think could benefit from completing an insurance review with a member of the WalkerHughes team, let us know!  As part of our referral program, we will email you a $5 Starbucks gift card to treat you to a virtual cup of coffee on us and make a $5 matching donation to our agency’s Charity of the Quarter.  We are proudly partnering with Second Helpings this quarter and are looking forward to supporting their mission of ‘Transforming Lives Through the Power of Food’.  To learn more about Second Helpings and the services they provide our community, you can visit their website by following this link.