What is full coverage auto insurance?
Posted on Sun Jul 04, 2021
Full coverage means that your car is fully covered. It does not mean that you and your passengers are fully covered.
I cannot tell you how many times I have asked a new client for their insurance information and they replied, “I have full coverage.” Later, after we have reviewed their policy, they were in fact underinsured. In my law practice, 90-95% of my clients do not have enough insurance coverage for themselves.
What does full coverage insurance consist of?
A “full coverage” policy typically has three components. These three types of coverage all cover your vehicle.
1. Liability coverage, which pays for injury to another motorist or damage to another car. Alabama requires that drivers have a minimum amount of $25,000 in liability coverage.
2. Collision coverage, which pays for physical damage to your car if you run into something, such as another vehicle or a tree.
3. Comprehensive coverage, which pays for physical damage to your car that is not the result of a collision. For example, comprehensive coverage might pay for damage resulting from vandalism, severe weather or theft.
What other types of coverage are there?
Full coverage means your vehicle is covered. But what about you and your passenger? A good way to think about auto insurance is in three basic categories:
Coverage for your vehicle;
Coverage for others, this is called liability coverage; and
Coverage for yourself and your family
A. Uninsured/underinsured motorist coverage and medical payments coverage
COVERAGE FOR YOURSELF AND YOUR FAMILY IS THE MOST IMPORTANT.
Look at your auto policy. Do you have uninsured/underinsured motorist (“UM/UIM”) coverage? Do your uninsured/underinsured motorist coverage limits match your liability coverage limits? If not, talk to your insurance agent. You should pay for as much uninsured/underinsured coverage as possible. I personally carry $250,000/500,000 in uninsured motorist coverage on my vehicles. Under Alabama law, plaintiffs can stack coverage on up to three vehicles per policy. That means that if I am in an accident, my insurer will pay up to $750,000 per person or $1,500,000 per accident.
50% of drivers in Alabama are uninsured or only carry the minimum amount of insurance as required by law. If you are in a serious accident with severe injuries, there is a 50% chance that you will be able to recover, at most, $25,000 from the driver who caused the accident. That is not nearly enough.
Uninsured/underinsured motorist coverage kicks in to cover your damages that exceed the other driver’s insurance coverage. It is important that you purchase as much uninsured/underinsured motorist coverage as possible.
Medical payments coverage also covers you and your family while they are riding in your vehicles. Medical payments coverage (“Med Pay”) can be used to pay out-of-pocket medical expenses after a car accident, regardless of who caused the accident. Medical payments typically start at $1,000 in coverage and go up to $100,000. It is wise to have at $5,000 in medical payments coverage, if not more.
FULL COVERAGE AUTO INSURANCE CAN LEAVE YOU UNDERINSURED
No matter what type of auto insurance policy you choose, you want to understand what coverages it includes. Some consumers who buy a "full coverage" policy are later shocked to find out that they've got less insurance coverage than they thought.
Just because you ask for “full coverage” does not mean you are covered for everything, and it definitely does not mean you are carrying enough coverage. Contrary to what the term suggests, "full coverage" policies do not include many types of coverage that you may need. Other benefits that frequently are not included in "full coverage" policies include:
Rental car reimbursement coverage; and
Medical and rehabilitation expense benefits, loss-of-pay benefits, and funeral expense benefits are other optional types of coverage that typically are not part of a "full coverage" plan.
Even in cases where a "full coverage" policy includes a certain benefit, that doesn’t mean it includes the maximum levels of coverage or even the amount of coverage that you need. Most auto insurance companies will only give you only state-minimum liability insurance unless you ask for more. For example, if a state requires that you have $25,000 in bodily injury liability insurance, that figure might be what an insurer includes in a "full coverage" policy. However, if you cause an accident and the other driver sues you for $100,000 in medical bills, you might have to come up with the additional $75,000 out of your pocket.
Even though I classify myself as an accident and injury lawyer, I am also an insurance lawyer. Every case that I’m working on has insurance involved in some capacity. If you have questions about your insurance policy, give me a call. I’m glad to look at anyone’s insurance policy and tell you whether you are fully covered.
- Hunter Garnett