by solo insurance®

You bought a new car a couple weeks ago. You need full coverage and you know you paid for full coverage. Now your car insurance paperwork arrived; you don’t see the words “full coverage” anywhere on it.  Don’t fret. Here’s why.

Full Coverage Car Insurance

In vehicle insurance, there is no such thing as full coverage. You think you have full coverage but what you really have is a policy that includes physical damage coverage for your vehicle.  Non-insurance people commonly call it “full coverage.”

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The phrase “full coverage” in car insurance is an everyday term, a colloquialism, not an official insurance phrase. It generally refers to a policy that includes liability, plus comprehensive, and collision coverage. Some people use the term to mean they’re legal to drive in their state and the vehicle itself has coverage. The phrase likely emerged to differentiate a policy from a Liability-only policy (where the vehicle itself is not insured).

Physical Damage Coverage in Car Insurance

What is Physical Damage then? Physical damage coverage in car insurance refers to insurance coverage that helps you with the cost of repairing or replacing your vehicle if it’s damaged in a covered event or stolen. The protection provided includes Comprehensive and Collision. It can also include Towing/Roadside, and/or Rental but the minimum is Comprehensive and Collision.

“Physical damage” coverage is the language the auto insurance companies use. It is coverage for the vehicle itself and has a Deductible (the part you pay in the event of an incident). It provides you with financial assistance in the event of an accident, theft or other instance of vehicle damage.

Do I need Physical Damage Coverage on my car?

How do you determine if you need physical damage coverage? Your vehicle loan requires that you carry physical damage on the vehicle. Even if you never drive the vehicle, you still have to pay the loan so they want that loan collateral (your vehicle) covered. If the vehicle is a total loss in an accident, you still have to pay the loan back. Physical Damage coverage helps you bear the costs of an accident so you’re not entirely on your own if one happens.

Comprehensive and collision coverage provide you with financial assistance in the event of an accident, theft or other instance of vehicle damage. So even if you don’t have a loan on that truck and it’s not too old, you may still want to have physical damage coverage.

Recap: If you have comprehensive and collision coverage plus liability coverage on your policy, you have what’s commonly known as full coverage.

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