Liability covers your responsibility to the other driver or passengers for injury and property damage. It’s required in nearly every state. Collision coverage applies to damage that occurs to your car if you collide with something. Comprehensive coverage pays for things that happen to your vehicle outside of a collision. Every state in the U.S. can set its own requirements. These often include bodily injury liability and property damage liability. Some states also require insurance for uninsured or underinsured motorists. Some require medical payment coverage.
Your lender may require only that you meet your state’s minimum requirements if you’re financing your car, or it may require collision and comprehensive.
How Does Full Coverage Insurance Work?
Your coverage depends on your chosen policy, so it helps to ask and find out whether your carrier offers other options.
Medical Payments and Personal Injury Protection
Medical payment and personal injury protection are provided at the level set by state law. They help pay the costs of care for you or others in the car with you. It may also cover lost wages and other expenses from injuries suffered in the accident.
Uninsured or Underinsured Motorist Coverage
Some states require coverage to protect you if you collide with an uninsured or underinsured driver or if the other driver flees the scene. Their insurance, if they have any, might not be enough to pay for medical expenses. Check with your state to see what it requires.
Collision Insurance
Collision coverage covers damage to your car if you are at fault in an accident, whether your car strikes another vehicle or an object, such as a fence. It doesn’t cover damage to the other person’s car. You’ll choose your coverage limits and the amount you must pay as a deductible. These amounts will affect your premium. Your lender might require this coverage if you bought your car with a loan. Otherwise, it’s often an option.
Comprehensive Insurance
Comprehensive coverage pays for damage to your car not caused by a crash. That would cover events such as fire, theft, storm damage, animal damage, or falling objects. Comprehensive insurance helps pay for damage to your car that is outside your control.
Additional Auto Insurance
You might think that towing and car rentals are included with full coverage, but that’s not always the case. Be sure to discuss your options with your agent, so you won’t be caught by surprise. You might be able to add a few options to your policy at minimal cost.
Gap Insurance
Gap insurance is also known as “loan payoff” or “lease payoff” insurance. You should request it if you’re taking out a loan for a large portion of your auto’s value. You’ll have to pay for that “gap” out of pocket if you owe more on your loan than your car is worth and you have an accident, or if your car is stolen. Cars depreciate quickly, so it could be worth the cost.
Towing and Roadside Assistance
Roadside assistance is often packaged with full coverage. It often includes towing and services such as changing a flat tire or jumping a dead battery.
Car Rental Coverage
Some insurers offer limited car rental reimbursement when you purchase full coverage. This coverage isn’t always listed, so you have to ask what your policy provides.
OEM Endorsement
Insurers don’t authorize repairs using parts straight from the car manufacturer, also called the “original equipment manufacturer” (OEM). They may require cheaper or used parts for repairs instead. But some insurers will offer a rider that allows you to get OEM parts if you request it.
Full Glass Coverage
Glass damage falls under comprehensive coverage. It’s automatically covered when you choose full coverage. However, selecting a high deductible could wipe out your glass coverage, because you’d be responsible for paying for more than the glass cost. You pay a higher premium to get no deductible with full glass coverage; sometimes, you’ll have a lower deductible for glass claims only.
Vanishing Deductibles
A vanishing deductible is a rarity among insurers. This policy rewards you with a discount for every year of safe driving. It often doesn’t come automatically with a full coverage policy—it’s generally offered for an extra cost and needs to be added before a loss occurs.
Do I Need Full Coverage?
Some coverages are required by law or by lenders. If they’re not necessary, whether you have them or not is your preference. It may be wise to protect against a significant liability in the event of an accident if you don’t have enough money saved to cover damages. You should purchase coverage that addresses most events and grants you a low deductible in that case. However, keep in mind that you’ll pay for that coverage through high premiums. You might elect less coverage or higher deductibles if you have plenty of money saved so you can absorb much of the cost of an accident, but medical expenses from an accident can be far more costly than buying a new car. Your agent can help you think through the risks and help you decide.
