By Zak Larsen
A question I get asked nearly every time I’m discussing an auto policy with a customer is “Do I really need full coverage?” The answer isn’t as simple as I’d like it to be, in a world of so much relativity the answer is simply; it depends. Let’s walk through that decision together real quickly here.
First of all, what does full coverage mean? What most people are referring to when they say “full coverage” is simply comprehensive and collision coverage. These two coverages take care of the damage to your own vehicle in the case of an accident, your state required liability coverage handles the damage to someone else’s property.
Collision is just what it sounds like, when you are found to be at fault for an accident in which you collide with another vehicle or object then this coverage comes into play and will pay for the damage to your vehicle. Comprehensive is basically everything but collision, this is what covers damage to your vehicle from things like fire, hail, theft, and just about any other cause of loss that is not colliding with an object or vehicle. Something to note: the only time running into something is covered by comprehensive is when it is an animal that is hit, all other collisions would fall under the collision coverage.
In addition to comprehensive and collision coverage you can purchase a whole slew of other coverages for your vehicle which are what a lot of people call “convenience coverages” these are things like roadside assistance, rental car allowance, and loan payoff in the occasion of a claim.
Now that we know what we’re talking about, do you need full coverage for your vehicle? Let’s walk through the questions I normally ask someone when they are truly questioning it.
- Do you have a loan on your vehicle?
- Most, if not all, lien holders require that if you have a loan on the vehicle you must carry comprehensive and collision coverage on the policy in order to guarantee that the value of the vehicle could be paid back to them in the case that their investment is lost in a claim.
- How old is your vehicle?
- Is your vehicle still worth enough to justify paying the extra premium to repair or replace the vehicle in the case of an accident? Generally at about the 10-15 year old mark is where I start to question the value of the car vs. the premium it cost to insure for comprehensive and collision.
- Are you financially stable/comfortable?
- I’m not asking you to tell me your personal finances but simply for you to consider if you have enough built up in savings to replace or repair the car on your own if it were to be damaged.
All in all it really does depend on your situation but these questions can hopefully help guide you through that process of balancing coverages and premiums to find what’s best for you.
Have questions about your policy? Give us a call at 877-971-6300, even if you’re not one of our insured’s we are always willing to answer questions and help you in any way possible!
Zak started at MAX in October of 2017 and has 3 years of insurance experience, specifically in auto insurance claims. A big sports fan, he spends time cheering on the Wild, Twins, and Vikings. Most of all he enjoys spending time with his family, working with his hands, and doing just about anything outdoors (especially fishing and camping). Zak also volunteers with a local high school youth group and helps to run a networking group for young professionals.