When I talk to a potential client and ask what coverage they currently have for their auto insurance, the two most commons responses are “liability only” and “full coverage”. Liability only is fairly straight forward; if you’re at fault in an accident, liability coverage provides protection for damage to the other person’s vehicle, their medical expenses, and lawsuits arising from the accident, up to your policy limits. There is no coverage for damage to your own vehicle. When someone mentions full coverage, they’re typically referring to collision (repairs your own vehicle if you’re at fault), and comprehensive (damage to your vehicle other than collision, i.e., theft, vandalism, fire). But does having full coverage mean you’re covered for everything? Far from it!
What coverage does NOT come standard on a full coverage policy?
Towing & Roadside assistance – Lock your keys in your car, run out of gas, or get a flat? Add towing and roadside coverage to your policy before the fact so you avoid having to pay out $50-$200 for a tow truck.
Rental Car Coverage – If you’re at fault in a crash, your policy will not automatically provide a rental car while your car is being repaired. The average cost of a rental is $40/day, so you can potentially be out hundreds of dollars while your car is being repaired. Consider adding this to your policy if you don’t have an alternate vehicle to use.
OEM Parts – In California, insurance companies are not required to repair your car with OEM parts (Original equipment manufacturer). The parts they use are comparable quality, but are manufactured by a third party. Some insurance companies offer an optional OEM Parts Replacement endorsement that allows the repair shop to use original manufacturer parts, unless unavailable.
Medical coverage – Your auto insurance won’t pay a dime of your medical bills in an at fault accident unless you have this coverage. Yep, you read that right. Fortunately, your personal health insurance should pick up the bill for you, but what about your deductible? Medical coverage on your auto insurance was designed to help you with costs up until you reach your health insurance deductible (usually $1,000-$5,000), so select a limit equal to at least that amount.
GAP Insurance – If you total your vehicle, the insurance company will pay out roughly the market value. If you bought it in the last couple years that could mean you actually owe more than the market value of your car. GAP Insurance is coverage for the difference between the car’s value and what you actually owe.
Additional equipment – Your car is insured based on the specifications the VIN pulls up, and that’s what will be replaced. If you add something post-factory (nicer wheels, stereo system, lift kit, navigation, etc.), you need to add additional equipment coverage to your policy.
Each insurance company offers a different set of policy options, and this list may not be every feature available from them. Make sure to review with your broker or agent and discuss the policy options your family needs. It’s better to take the time now than find out you have to spend another $500 in unexpected costs later. This article is in relation to California auto insurance only. Other states may vary.
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Owner of Paul Nelson Insurance, and resident of Santa Cruz and Monterey counties for 30 years.