In the insurance industry we often get asked for policies providing “full coverage,” but this is not a straightforward request. “Full coverage,” is not technically an insurance term. Many people use “full coverage” to refer to automobile insurance policies that carry both the liability coverage generally required to register a vehicle and coverage for the vehicle itself, specifically comprehensive and collision coverage.
Having “full coverage” does not guarantee you will have the coverage you need after an accident. You will need to determine the appropriate liability coverage as well as coverage for medical and other expenses available for you and your passengers following an accident. Many vehicles, particularly older models without significant value, carry liability and medical coverage without comprehensive and collision coverage protecting their vehicle. This is perfectly legal and, at times, the most appropriate way to cover a vehicle.
Comprehensive coverage provides funds to repair or replace your vehicle if it is stolen, needs glass repaired, or is damaged in a collision with an animal – for example, if you hit a deer. It also covers acts of nature; such as if your vehicle is damaged during a hurricane, if a tree falls on it, or it is pockmarked by a hailstorm. You choose the deductible that applies, the amount you must pay towards repairs before the insurance policy kicks in to cover the rest up to the actual cash value or agreed value of the vehicle. Comparatively, comprehensive coverage is relatively inexpensive. Some people with older vehicles or vehicles in storage may choose to carry comprehensive coverage without collision coverage lower their automobile insurance premium. In Florida, comprehensive coverage will replace a damaged windshield without requiring you to pay a deductible.
Collision coverage will repair or replace your vehicle if it is damaged during an accident you cause, whether it involves another vehicle or simply running into a tree. If you hit something besides an animal, damages will be repaired under collision coverage. Like comprehensive coverage, a deductible applies to any loss and the vehicle is covered for its actual cash value or agreed value depending on your policy terms. Unlike comprehensive coverage, collision coverage tends to be quite expensive. While you can carry comprehensive coverage without collision coverage, collision coverage is not available unless you also have comprehensive coverage on your car. Because it is more expensive, some people choose to carry a higher collision deductible than comprehensive deductible in order to reduce the policy’s premium.
If you have an automobile loan, your lien holder will require that you carry comprehensive and collision coverage on your vehicle. Sometimes the lien holder will even dictate the highest deductible you are allowed to carry. Many lien holders are not comfortable allowing deductibles over $500.00. The same is true if you lease a vehicle. I either scenario, you will be required to list the lien holder on the automobile policy, and add the company as an additional insured if you are leasing the car. This protects the company’s interest in the vehicle, ensuring the loan will be paid even if the vehicle is total in an accident.
There are instances where some find it more cost effective to remove comprehensive and collision from a vehicle on their insurance policy. The good news is, unlike with liability coverage, you can pick and choose which vehicles on your policy will carry the coverage. Frequently people with vehicles more than a decade old or with cars driven by teenagers may choose to decline comprehensive and collision coverage.
As always, a licensed and trusted insurance agent is your best resource when deciding what insurance coverage is right for you. If you think you may want to adjust the comprehensive or collision coverage on any of your vehicles, quotes to remove either coverage or adjust your deductibles can be easily provided. At Dimmitt Insurance we are happy to provide complementary insurance reviews to both current and prospective clients.
For additional questions or comments, please contact me at Dimmitt Insurance:
Elizabeth Staley, Private Client Account Manager
25191 US Hwy 19 N
Clearwater, FL 33763