The 'Full Coverage' Auto Insurance Myth

The term “full coverage” gives people the false impression that they are going to be fully covered in every situation after an auto accident.

When you are at the dealership after purchasing a new car and they ask for proof of “full coverage,” all they care is that you have collision and comprehensive coverage until your car is paid in full.  The dealer or lender wants to be assured that your car is going to be fixed after an accident to protect their investment until they no longer have a financial interest in the car. They don’t care whether or not you have optional coverages that protect you and your passengers.

In the state of Texas, there is only one coverage that is required by law and that is liability coverage.

Every driver must carry state minimum liability coverages to cover bodily injury and property damage caused by an at-fault accident.  All other  coverages are optional.

There are 4 optional coverages in Texas that people think they automatically have on their auto policy when they ask for “full coverage”:

1.  Uninsured/Underinsured Motorists Coverage

In the state of Texas, it is estimated that 20% of the drivers are driving without insurance.  Of course, there is no way of knowing the exact number of uninsured drivers on the roads.  If you choose to reject this coverage, your car will still be repaired if an uninsured motorist hits you, as long as you have collision coverage and you pay your deductible, but you and your passengers will not have coverage for your bodily injury.  Again, your lender doesn’t care if you and your passengers have coverage for your injuries if an uninsured motorist hits you, only that your car is repaired after the accident.   In Texas, if you reject uninsured/underinsured motorist coverage, you are required to sign a document stating you are aware that you are giving up this coverage.

2.  Rental Car Reimbursement Coverage

This coverage provides a rental car to you while your car is in the shop being repaired, whether the accident was your fault or not. Many people get very upset when they realize that they do not have this optional coverage after an accident, because most people still need a car while their car is in the shop.  Again, your lender doesn’t care whether you have a rental car after an accident or not.

3.  Personal Injury Protection and Medical Payments Coverage

Many people assume that “full coverage” means automatic medical coverage.  If you have an at-fault accident or are hit by an uninsured motorist, and you have rejected personal injury protection or medical payments coverage, your insurance company is not required to pay for any of your medical expenses related to the auto accident.  Although it is possible to save money on your auto insurance if you give up these coverages, medical or personal injury protection coverages should not be given up lightly.

4.  Towing and Roadside Assistance Coverage

This coverage will pay for  roadside assistance up to your policy limits.  Since the cost for this coverage is relatively inexpensive (approximately $7 per vehicle every 6 months), it is a good coverage to have on your auto policy.

If you think you have “full coverage,” it’s a good idea to review your auto policy and make sure you have all the optional coverages you need to protect yourself, your family, and your passengers after an auto accident.



Cheri Roman
Cheri Roman
I’m a graduate of the University of Texas & have a master’s degree in Business Administration from Texas A&M University, Corpus Christi. As a former teacher, I believe in educating my clients about insurance and investment options, and partnering with them to protect their family and achieve their financial goals.

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