Car Insurance: What Do The Numbers Mean and What is "Full Coverage" Any Way?

December 21, 2010  |  John T. Buchman

People often purchase car insurance early in life and seldom revisit their insurance coverage with their agents. People often ask me, “How much coverage do I have?” or “What do the numbers mean?”
Many are confident they have adequate insurance because they purchased “full coverage,” but what does that really mean?

Car Accidents

What do the Numbers Mean?
Minnesota law regulates car insurance policies issued in Minnesota and sets various minimum coverages and types of mandatory as well as permissive coverages. If you look at your insurance card or declarations page from your insurer, you may see numbers such as: $100,000/$300,000/$50,000, P20A, 100,000/$300,000 UM/UIM (or U/W). So what do these numbers mean? Insurance coverages generally fall into three categories: liability; personal injury protection “PIP” or no fault; and uninsured/under insured motorist coverage.
Liability coverage protects you from lawsuits against you or an insured under your policy for car crashes for which you/they are legally responsible. In the above example, the most the insurance company would pay on your behalf is $100,000 per person for bodily injuries they suffer; $300,000 total for everyone injured in any one collision and $50,000 in property damage (including cars, roadside light poles, etc.). (You can and should consider higher coverages).
PIP or No-Fault
This is the coverage that exists to compensate you or other insureds (family members residing with you) under your policy for injuries you/they suffer in a collision regardless of fault. P20A or a something similar code signifies the minimum amount of no-fault coverage. Each injured person would be entitled to be reimbursed for up to $20,000 of lost wages or other economic loss benefits including replacement services and obtain payment for up to $20,000 for medical expenses that you incur treating injuries suffered in the collision. There are also coverages available in the unfortunate case of death to an insured. Unfortunately, the statute only mandates $2,500 in funeral loss benefits, which is seldom adequate. Again, you should seriously consider buying higher levels of coverage and/or stacking.

Uninsured/Underinsured Motorist Coverages

This is another mandatory coverage that exists to protect you or others insured under your policy from injuries you/they suffer as the result of a driver who has no insurance or not enough insurance to fully compensate for the injuries. This is referred to as “UM” and “UIM” coverages respectively. In the above example, one injured person would be entitled to up to $100,000 in coverage for personal injuries suffered as a result of an uninsured/underinsured motorist and $300,000 would be the total available to all people injured in insured vehicle during one collision. The UM/UIM coverage on the car involved in the collision is the primary applicable insurance policy. There may be other insurance available under certain circumstances.
What is “Full Coverage”?
This typically has little or nothing to do with coverage for any injuries caused by a collision. Rather it commonly refers to collision, glass, or repairs to fix your own car if it’s involved in a collision. This would also include whatever insurance deductible that would apply to you getting your car fixed. Thus, having “full coverage” really doesn’t mean anything in terms of protecting you or your loved ones from any personal injuries that they may suffer. Please contact BGS if you have any questions about your auto insurance coverage or any of the above information.