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Do I Need “Full Coverage” Auto Insurance?

The short answer is yes. We recommend that every driver examine their policy to ensure they are fully covered in the event of a collision. It is essential to know what options you have in order to evaluate your needs as a driver.

The thought of full coverage usually alludes to having additional personal use coverages on an auto policy in addition to the required state liability coverage. Most insurance companies offer several other ‘elective’ coverages which policyholders can elect in addition to their basic coverage but aren’t necessarily required. In addition to the Uninsured Motorist (UM) coverage which is usually required to be a part of any liability policy, Underinsured Motorist (UIM) coverage is elective coverage that helps provide additional funds to an insured person if a driver injures them without sufficient liability coverage.

Medical Payments (med pay) coverage can help an insured person pay for medical expenses incurred because of a collision. Rental reimbursement options may be available to help defray the expense of a rental vehicle if needed. Collision coverage ensures that your vehicle can be repaired after a collision, and comprehensive coverage is used if a vehicle is stolen or damaged by a collision with an animal. An umbrella policy may be useful for someone who has a large amount of owned outright assets; these policies provide a pool of funds above any liability policy in effect.  

An important factor to think about when selecting optional coverages are the limits for each type.  Normally, each additional coverage type has different limit levels you can select based on which optional coverage you’re deciding on. UIM limits tend to mimic the levels used for liability/UM coverages, for example – $50,000 per person / $100,000 per accident, etc. Med Pay limits are normally a lump sum amounts in differing increments, like $1,000 or $5,000. Like the rental reimbursement, some coverages may depend on the type of vehicle insured, which level rental vehicle you select to be covered, or what the carrier will authorize as a maximum allowed rate. Ask your carrier about how they set the terms and limits for optional coverages and what those limit options are.

It would help to review what type(s) and levels of coverage you will need and would use as a driver. It is a great idea to make sure your policy has UIM, med pay, rental reimbursement, collision, and comprehensive coverage. However, each component of your policy will have its limit level and corresponding charge. For example, suppose your insurance company offers $25,000 in med pay coverage, but that amount causes the policy premium to be unmanageable. In that case, it may be a better decision to keep the coverage but at a lesser amount.

If someone does not own several large-value assets outright, an umbrella policy may not be necessary. When it comes time to select coverages, think about what resources you would like available if you were ever in the situation to need them. How much assistance might you need in covering costs out of pocket, replacement transportation, etc.? What amount will fit into your budget?

Overall, it is always important to carry a “full coverage” policy to protect yourself for your peace of mind. Insurance policies can be tailored to individual needs, so it is relatively easy to accomplish that goal. With a bit of thought and planning, you can ensure that you are fully covered for any situation. If you ever have to use your insurance, you will be happy you took the time to be fully covered.

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