What Is “Full” Coverage?

You are told by your dealership when you buy a car with a loan that you need “full” coverage, but what exactly what is being asked for when you want to include “full” coverage on a vehicle? There is no one specific coverage called “full” coverage.  Since what is in your mind probably isn’t the same as what is in your insurance agent’s mind, let’s clarify what falls under the umbrella of “full” coverage and the options you have. Let’s agree that “full” coverage includes all the coverages that are specific to a particular vehicle rather than the coverages that apply to the policy as a whole.  These can include:

  1. Collision coverage is a required coverage when you have a loan on the vehicle. However, the deductible can vary widely. You can choose many options between $100 to $2000. It is important to keep your deductible low enough that you can afford to pay the amount of pocket at any time if you have an accident and need your vehicle repaired.  However, the lower the deductible, the higher the cost. Many people choose a middle ground of around $500 for a collision deductible. Let your agent know what deductible amount do you want for your collision coverage.

  1. Comprehensive coverage is also a required coverage when you have a vehicle loan. There are also the wide varieties of deductibles between $0 to $2000.  For comprehensive coverage, usually the lower the deductible, the better. Comprehensive coverage is generally less expensive than collision coverage. So if it does not cost a lot more to have a $0 deductible than other amounts, it is convenient to have nothing out of pocket if you hit a deer or take a rock to the windshield. Let your agent know what deductible amount do you prefer for your comprehensive coverage

  2. Towing and labor coverages are vehicle specific as well. While this coverage is not required if you have a loan, this is a coverage available to help you out with a short tow or offer some simple roadside assistance.  Usually there are only a few per incident coverage amounts to choose.  Tell your agent whether you would like towing and labor coverage, and if so, for what amount per incident.

  3. If you have a collision or comprehensive claim, your vehicle has to go to a shop to be repaired leaving you without a vehicle. While not required by a vehicle loan either, rental reimbursement coverage can cover the cost of a rental car for a short period of time while your vehicle is being repaired due to a claim. You choose this coverage amount at a per day maximum. Keep in mind the type of rental vehicle you would like in exchange for your vehicle being in the shop as larger rented vehicles cost more per day. Let your agent know if you would need a rental car if you have a claim, and if so, how much coverage per day do you want.

  1. Lastly, some policies offer coverages specific to brand new vehicles. These are not required by vehicle loan lenders, but can help you of sticky situations if a brand new vehicle ends up totaled.  You would have to speak to your agent specifically about the coverages available to you. Some offer replacement cost on new vehicles instead of actual cash value. Some offer to replace your new vehicle with whatever the current year is of that same make and model for a set number of years. Some policies may offer a form of gap coverage. So if you buy a brand new vehicle, be sure to ask your agent if they have any special coverages available.

So next time if you ask for “full” coverage on a vehicle, try to clarify for your insurance agent what you really want and need on your vehicle.  The extent of coverages and costs can vary widely depending what amounts and deductibles you choose.  Feel free to ask for cost comparisons between taking a certain coverage amount versus another to find the right coverage and cost balance for you.