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Do You Have Full Coverage Auto Insurance?

Auto Insurance Policy.jpg

Trick question, there is no such thing as full coverage. Instead, there are several different types of coverage with many different amounts of money they will pay after a collision.

I have written this article to help you understand auto insurance so that you can ensure you have the important coverage that will protect you, your friends, and your family if you are ever involved in an auto collision.

A lot of my clients come to me after they’ve been in an auto collision and they believe they have “full coverage”, when in fact, they only have bare bones coverage. It’s not their fault. If you are like most people, you don't read much of what your auto insurance company sends you. The policies are written in a way that is difficult to understand and confusing. I've outlined the most important types of coverage you need to have on your auto policy to ensure you're protected:

Liability Coverage:

First is liability coverage. This is the only coverage required by law in Washington State. You purchase it so that in case you do something wrong, there will be money available for the people you injure. The state minimum is only $25,000. 00. For you own protection, you should buy the highest liability coverage limits you can afford, especially if you make a lot of money or own property and assets. Purchasing high liability limits is also important because these limits will also determine the amount of underinsured motorist coverage (UIM) available to you.

Personal Injury Protection:

The second coverage you need to have is Personal Injury Protection (PIP). PIP will pay for your medical treatment immediately after the collision. Most people believe that the at fault driver’s insurance pays for their medical treatment. This is a common misconception. The other driver's insurance does not pay for your medical treatment until the very end of the case at the time you settle your case. Think of it more as a reimbursement. However, your medical providers will expect to get paid right away, at the time of treatment. What about your health insurance? Unfortunately your health insurance has co-pays, deductibles you must meet, and they don’t cover all treatments. Therefore, purchasing PIP is a very good idea.

Uninsured/Underinsured Motorist Coverage:

Third is Underinsured/Uninsured Motorist (UIM). 17.4% of Washington drivers do not have insurance. That means you’ve got a 1 in 6 chance of getting in a collision with a driver who has no insurance. How do you like those odds? What are you going to do if a person with no insurance rear-ends you? Unfortunately, there is not a whole lot you can do, which is why UIM is so important. UIM will pay for all the damages caused by the uninsured or underinsured driver.

Collision Coverage:

The fourth type of coverage is collision. Collision coverage pays for damage to your vehicle from an accident regardless of who may be at fault. Collision coverage pays for repair or replacement of a vehicle, up to the fair market value of the vehicle, subject to a deductible which may range from $250 to $1,000. You can reduce the cost of this coverage by choosing a higher deductible amount. 

Comprehensive Coverage:

The fifth type of coverage is comprehensive. This coverage protects your vehicle from damage caused by fire, theft, vandalism, weather, glass breakage and contact with an animal. Note, however, that this coverage usually does not cover such “portable” items as cassette tapes, CDs, personal music devices (iPods, etc.), tape decks or cell or car phones. Coverage for these items can typically be added by specific endorsement.

Other Insurance Options:

Other coverage which is typically offered includes towing and car rental. For a small additional cost, these benefits are usually worthwhile to have on your policy, as towing and car rental costs can be substantial if you are hit by an uninsured driver and have no other way to obtain coverage for these items.

What Next?

You are now armed with the knowledge of the types of auto insurance coverage you need to protect you. Review your insurance declaration page to find out what type of insurance coverage you actually have, rather than blindly believing you have “full coverage.” If you discover that you need to add coverage, contact a reputable insurance agent and have the above coverage added to your policy.