- Some may think that full coverage means coverage in full for any conceivable occurrence. In realty, full coverage simply means that physical damage protection has been added to mandatory coverages, such as liability, personal injury or medical. Liability coverage is for injuries and damage caused by the policyholder as a result of a covered accident. Medical and personal injury protection provides coverage for injuries sustained by the policyholder and passengers in his vehicle.
- The two components to physical damage coverage are comprehensive and collision. Comprehensive coverage extends to damages to the policyholder's vehicle that are not related to accidents, such as theft, vandalism or glass breakage. Collision coverage will pay to repair or replace the insured's vehicle for damages from a covered accident.
- Physical damage coverages are the only ones that require the insured to pay a deductible before coverage begins. The main reason for the deductible is to keep the reporting of very small claims by policyholders to a minimum. Deductibles will vary, but insurance companies rarely offer deductibles in excess of $1,000. If the vehicle is financed, the lending institution may require that the policyholder carry full coverage until the vehicle is paid off.
- The inclusion of physical damage coverage means that the policyholder won't have to pay for major vehicle repairs out of her own pocket, which may be a financial impossibility. If the vehicle is stolen, it also means that the policyholder won't have to pay to replace the vehicle in the event it is not recovered.
- While full coverage protection is extremely beneficial in many circumstances, there are also situations where it may not be needed. For example, if the vehicle is paid off and has decreased in value, the worth of the vehicle may not make the cost of the coverage worth the price. In many cases, physical damage coverage may make up about half of the total insurance premium.
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