Full Coverage Auto Policies Debunked

by Thomas C. Sinowski on Apr. 11, 2019

Accident & Injury Car Accident 

Summary: Everyone thinks they have a full-coverage auto policy, when in reality they don’t. The truth is there is no such thing as “full coverage” in an auto policy. The state of Georgia requires a minimum mandatory coverage of liability, which currently breaks down to 25/50/25.

What do the numbers 25/50/25 mean anyways?

One person can collect a maximum of $25,000 from your policy for personal injury. If they want or deserve more, they'll have to sue you and get a judgment against you and your personal assets. 

Say there are five people hurt in the other car involved in your accident, and one person gets the full $25,000. The remaining four people can only claim $25,000 (adding up to $50,000, which is where we get the 50), and this amount is divided among them. This division depends on injuries and is not necessarily equal. 

The maximum your policy will pay for the amount of property damage you caused another vehicle(s) is $25,000.

Additional Coverage is Not Full Coverage.

For an added cost, you can purchase additional coverage: liability coverage, property coverage, uninsured motorist coverage, medical payment coverage (for yourself and the passengers in your car), and comprehensive coverage. There are different levels of additional coverage that you can purchase. 

Past this, you can purchase umbrella coverage to increase your coverage even further, and coverage to protect you in the event that you cannot work after an auto accident. There are plenty of ways to beef up your policy, but nothing will make it "full coverage."

Alternatives to Liability Coverage.

If you are fortunate to have enough money, you can place it with the state to cover your liability if you are involved in a car wreck. This way, if you are never in an accident, you don't pay a single cent; however, if you travel anywhere between 10 and 20 miles each day, there is a very good chance you'll be involved in at least small accident every few years.

What is Gap Coverage?

Guaranteed Auto Protection (GAP) insurance covers the difference between the actual value of your car if it's totaled and the balance owed on your financing. GAP insurance is good if you finance or lease a car, but you do pay a premium for protection. 

Here are some examples: 

You buy a car at $25,000 and you pay $1,000 down, financing $24,000. You drive off the lot and immediately hit someone or someone hits you. Your car is totaled and valued at just $2,000 now. If you have GAP Insurance, that left over $22,000 is paid for and you owe nothing. 
You lease a car for the value agreed upon in the lease: $25,000. The same situation occurs--you drive off the lot and get into a car accident. GAP insurance will cover the difference between the balance you owe and the new value of the car. 

It should be noted that the second you drive a car off the lot, it depreciates. Your car may still be brand new, but the value could have dropped. GAP insurance will cover the difference between this new value and the value of the car after the wreck. 

GAP Insurance also covers theft, though there is a waiting period after the claim is filed to see if the vehicle can be recovered.

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