Browsing through RidingOn last month I came across the piece by our favorite motorcycle attorney Ralph Buss. He has thoughtfully put together a series of programs of interest to riders, and one of them is a topic I hold dear – There’s no such thing as “Full Coverage” insurance. We do not use this term in our office – and here’s why:
You will never find the words “Full Coverage” in an insurance policy or on your declarations page because insurers do not sell full coverage – they sell only coverage at the limits and deductibles you have chosen. Yes – I really did say this. Even though your agent or insurance company’s customer service staff may use this term, insurance companies do not sell Full Coverage insurance. And in my opinion, the use of this term gives many insurance buyers a false sense of security. “Do you have enough insurance coverage?” “Oh Yes, I have full coverage.” But do you really?
For example – you have a “full coverage” insurance policy on your bike. You have chosen the state minimum liability coverage and have a $1000 deductible for damage to your vehicle. You have not purchased any other coverage. You and a friend are riding bikes together when you lose control, sliding your bike into your friend’s and causing him to go down. You are not hurt, but your friend has a serious head injury, and his new Harley is a total loss. Your bike has sustained serious damage. The $25,000 bodily injury liability coverage on your policy does not cover the initial emergency surgery for your friend, and the $1500 in property damage liability coverage you bought will not pay even half of his new bike value. You did not choose to cover the $5000 in chrome you had on your bike. Since your policy will not cover your friend’s medical or bike bills, you will need to hire an attorney to represent you in a court proceeding. (You think your friend won’t sue you? He may not have a choice. His health insurance company will only pay for his injuries with the understanding that they will attempt to collect from you.) This “Full Coverage” policy wasn’t full coverage at all!
Change a few items in this scenario, and the results can be much worse or much better. What if YOU are injured in the accident? Your policy does not include any medical protection for the operator. I hope you have good health insurance. What if you had purchased liability protection at $100,000 per person, $300,000 per accident for bodily injury and $50,000 for property damage? Well, your friend’s bike should be easily replaced with $50,000 and while it may still fall short, $100,000 toward his medical costs is a lot better than $25,000!
Usually when insurance industry members use the term “Full Coverage”, they mean the policy includes coverage to replace or repair your vehicle, in addition to the state required “liability” protection for injury or damage you cause to others. A “Liability Only” policy does not include any benefits to repair or replace your vehicle. But you may choose to include optional Medical Payments or Uninsured/Underinsured Motorist Bodily Injury benefits that would pay if you are injured.
The terms “Full Coverage” and “Liability Only” cover a wide range of coverage levels, options, and deductibles. Rather than use such vague terms, your insurance agent should go through each part of your insurance package with you so that you can determine how much coverage you need to protect your assets and/or how much risk you are willing to accept yourself. There are many factors to consider – such as do you gave good health insurance, so Medical Payments are not necessary? Are you willing to choose a high Collision deductible, or decline Collision Coverage completely – or do you want to pay extra for your policy to pay for vehicle repair or replacement? Do you have significant assets to protect – such as a home and retirement savings, or are you just starting out and need more basic protection? You get to select the coverages and options that fit your needs and budget. But you should understand that your policy will only pay for damages up to the limits you have chosen. Do not accept that you have “Full Coverage.” After an accident you may find that “Full Coverage” did not fully protect you.
Karen Diehl operates Diehl Insurance with husband Eric. They agency specializes in motorcycle insurance for motorcycles and collector cars in Ohio, Kentucky and Indiana.
