full coverage auto insurance means

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The term “full coverage” is always floating around the insurance industry.  We get calls every day from customers asking for “full coverage” on their auto insurance, and it often comes as a surprise when we tell them that “full coverage” doesn’t exist.

Click here to see my Guide to Auto Insurance.

There is no coverage on an auto policy with any insurance company called “full coverage,” as there is no coverage that will cover you fully in every situation.  When people and car dealerships use the term “full coverage,” they are referring to the following 3 core coverages:

1.  Liability Coverage

The state requires everyone to carry liability insurance to cover bodily injury and property damages you might cause by an an at-fault accident.  In Texas, the minimum liability limits required by law are as follows:  $30,000 per person/$60,000 per accident for bodily injury/$25,000 for property damage.

2.  Collision Coverage

Where liability covers the other driver and his or her vehicle after an accident that is your fault, collision coverage protects your own vehicle.  If you have collision coverage, your vehicle will be repaired after you pay your deductible.  If you owe money on your vehicle, lenders will require that you have collision coverage to protect their interest.

3.  Comprehensive Coverage

Another term frequently used for comprehensive coverage is “other than collision.”  Just as it sounds, comprehensive insurance covers your vehicle when it is damaged for a reason other than a collision, such as vandalism, hail, flood, fire, or hitting an animal.  Like collision, if you have comprehensive coverage, your vehicle will be repaired after you pay your deductible.  Lenders also require comprehensive coverage in order to ensure that a vehicle will be repaired if it is damaged for any reason until it is paid in full.

When people use the term “full coverage” they frequently assume they have the  following optional coverages that are not required by the state or a lender.

Uninsured Motorist Coverage

In the state of Texas, it is estimated that 20-25% of all drivers are uninsured.  If you have comprehensive and collision coverage, your vehicle will be repaired after you pay your deductible, but that deductible is likely higher than the deductible of $250 that you would pay if you had uninsured motorist coverage.  Also, uninsured motorist coverage gives you an your passengers bodily injury coverage of at least the state minimums (In Texas, $30,000 per person up to a total of $60,000 for the accident).  Given the large number of uninsured drivers on the roads, this is an important coverage.  If you decline uninsured motorist coverage in Texas, you are required to sign a document rejecting the coverage.

Related article: Uninsured/Underinsured Motorists Coverage in Texas

Rental Car Reimbursement

If you have this coverage, your insurance company will pay for a rental car while your car is repaired after an accident, whether the accident was your fault or not.  Many people assume that if they ask for “full coverage,” they will automatically have rental car reimbursement coverage, but this coverage is optional.  After an accident, people are often very upset when they realize their auto policy does not pay for a rental car while their car is in the body shop.

Related article: Does Your Auto Policy Cover A Rental?

Personal Injury Protection (PIP)

If you opt out of PIP coverage,  you and your passengers will have no medical or lost earnings coverage after an at-fault accident. Like uninsured motorist coverages, if you reject PIP, Texas law requires that you must sign a document rejecting the coverage.

Related article: Understanding Medical Payments (MedPay)

As you can see, the term “full coverage” can be misleading.  If you think you have “full coverage,” it’s important to look over your auto policy and make sure you have all the optional coverages that you need.

Towing and Roadside Assistance

Towing is also an optional coverage.  It is very inexpensive and will cover towing and roadside assistance for any reason up to your coverage limits. Click here to see my Guide to Auto Insurance.

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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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