I recently placed a call to my insurance agent to discuss what it would cost to change my coverage from “full coverage” to just “liability.” After a short pause, my friendly agent explained to me why the term “full coverage” is a misnomer and what all of the auto insurance terms actually mean.
The term “full coverage” is most commonly used in reference to having comprehensive and collision coverage. My agent, Geoff Lewis of State Farm in Boise, explained the terms to me. He said that it was a pretty common misunderstanding of terminology and he was happy to clarify.
Liability Only Coverage
If your vehicle only has liability coverage and you are in an accident where you are at fault, then your liability coverage pays damages for bodily injury and property damages to others. This is the type of insurance that all drivers should carry at a minimum. Just be careful, because if damages go over what your insurance covers, you could find yourself in a bad situation.
Collision Coverage
Collision coverage takes care of your vehicle in the event it overturns or collides with another object regardless of fault. If you’re in an accident alone, with another vehicle, or with property then collision coverage helps pay for the damage to your vehicle. If the cost to repair your car is higher than the value of your car, collision coverage will pay for the value of your car.
Comprehensive Coverage
Comprehensive coverage will pay for damages to your vehicle for events other than collisions. Some of the items that may be covered under comprehensive coverage include:
- Fire
- Wind
- Hail
- Flood
- Vandalism
- Theft
- Hitting an animal
How do you choose?
After my agent explained the terms above to me along with medical payment coverage, uninsured and under insured coverage, he asked what I would like to do.
We decided to keep all of the coverage on our family vehicle, and opted to go down to liability only coverage on our small car and our truck. Since these two vehicles aren’t driven much and have very little value, it wasn’t worth it to pay the premium to keep comprehensive and collision coverage because it would end up costing more than what they were each worth. Since we most frequently drive our SUV, the family vehicle, we wanted to make sure we were covered in the event that anything should happen as it is the only vehicle that comfortably accommodates our entire family.
Understanding these three terms made making the decision so much easier and now I have a better understanding of how auto insurance works.
