updated: Mar. 14, 2016 –
Full coverage auto insurance is the best form of protection available to motorists. It does, however, have a name which can be misleading. Many drivers accept their full coverage policies as they are and fail to look closely at the limits which are placed on them. This can cause unpleasant surprises for motorists with full coverage that are involved in an accident and only then realize that even with full coverage they still have to pay excessive bills out of their own pocket.
Understanding Full Coverage
The biggest mistake to make is to think that full coverage insurance offers you complete protection. The term full coverage is simply meant to indicate an insurance policy which has three forms of coverage: liability, comprehensive and collision.
- Liability covers medical and property expenses of other people which you cause in an accident.
- Collision covers repairs for your own car in that particular accident.
- Comprehensive protects your car from damages sustained to your car when it was not involved in a collision. Common examples include hitting animals, theft, flood, fire and vandalism.
Between the three you would think that you are pretty well protected, but if that were the case there would not be additional services available.
Personal injury protection and uninsured motorist insurance are two extra forms of insurance that most people add to their policies if they are looking for the most protection possible. The first will pay for your medical expenses if you are involved in an at-fault accident while the second will pay for your expenses if you get into an accident where you are not at-fault and the at-fault driver does not have insurance or has insufficient coverage. Just keep in mind that these services do not come standard with the regular full coverage policy. They need to be added at your request.
Why Limits Are So Important
Besides the fact that there are extra services which you can add to your policy in order to protect you more completely, there are always limits to the payouts which you need to consider. An insurance policy does not give you a blank check which you can fill with whatever sum of money is required.
Each policy has very clear limits and whenever you file a claim, those limits are as high as the company will go when it comes to covering your expenses. Any sum of money that exceeds those limits has to come out of your own pocket. This is the most common mistake drivers make with full coverage insurance. They do not know their limits.
Usually, a policy has separate limits for medical bills, repair bills and collision/ comprehensive coverage, so it is important to know all of them. If you have a $50,000 limit on your bodily injury liability coverage but you cause an injury totaling $150,000 in an accident, you will end up paying $100,000. That is why you need to choose higher limits on your policy if you want to be thoroughly protected.
The standard recommendations for liability limits are:
- $100,000 for bodily injury (total per individual)
- $300,000 for bodily injury (total per accident)
- $100,000 for property damage (total per accident)
However, keep in mind these are only minimum recommendations. If available, higher limits would protect you even better for accidents involving multiple cars, serious injuries or death.