What is full coverage?

Long story short... Full coverage is a myth!

The idea behind the term "full coverage" in auto insurance is that you are protected legally with liability coverage and your property is covered with comprehensive and collision coverage. This means that if you are at fault for an accident, the other person's property has coverage (liability) and you have coverage on your vehicle as well (comprehensive and collision).

The catch to this term is that there is NEVER a time when you are covered in full on an auto policy. Every policy has limits. The are limits on the liability side which means that you can cause damage to someone's property that is greater than your coverage which leaves you vulnerable to being sued for anything over that limit (and yes, you will be sued). When thinking in terms of replacing your property in an accident your vehicle is almost always covered for actual cash value instead of full replacement cost. This means that you will receive the current market value for the damage sustained, which can sometimes benefit you and sometimes end up biting you instead.

The harsh reality is that insurance professionals aren't even legally allowed to use this term when referring to insurance. This is because it implies that your accident will be covered completely and can't spill over into your lap but that's far from how insurance works. This is why it's so important to have a discussion with your agent and make sure that they explain your coverage in a way that you understand instead of assuming your fully covered.