What is full coverage?

(Spoiler: It’s a Lie.)

I have been in insurance for a while now and I have met approximately one billion people who confidently tell me, “Don’t worry, I have full coverage.”

I regret to inform them, and now you, that “full coverage” is not an actual insurance policy. It is the insurance industry’s Bigfoot: everyone talks about it, but nobody can point to it on a declarations page.

Usually, when people say “full coverage,” they mean they have liability, comprehensive, and collision coverage. Liability helps pay for damage or injuries you cause to other people. Comprehensive and collision are the parts that may help pay for damage to your vehicle.

Comprehensive is for bad things that happen to your car without it colliding with something: theft, hail, flood, fire, vandalism, falling objects, or a deer choosing violence.

Collision is for when your car meets something it should not: another vehicle, a pole, a guardrail, your neighbor’s fence, or gravity. Both coverages usually have a deductible, because apparently disaster requires a cover charge.

Here is the fun part: even if an accident is not your fault, you may still need to decide whether to use your own collision coverage. You can file a claim with the other driver’s insurer, but first they may need to investigate fault, confirm coverage, review reports, and wait for everyone involved to remember the accident in completely different ways.

That can take days, weeks, or, if the insurance gods are feeling especially creative, months.

Using your own policy can be faster. You pay your deductible, your carrier can start handling repairs, and then your insurer may try to recover its money from the at-fault party’s insurer. This process is called subrogation, which is just a fancy way of saying, “Our insurance company is now going to argue with their insurance company.”

If they recover the money, you may get your deductible back.

One more surprise: paying $20,000 for your 2002 Chevy Silverado does not necessarily mean the insurance company will pay you $20,000 if it gets totaled. Most policies pay the vehicle’s actual cash value at the time of the loss, minus your deductible. Your truck may be priceless to you, but the claims department has spreadsheets.

So no, you probably do not have “full coverage.”

What you hopefully have is the coverage you actually need, plus enough knowledge to ask the right questions before a deer, hailstorm, or distracted driver makes the question urgent.