Full Coverage or “Fools” Coverage?

A great attorney and friend of mine once used the term “Fools” coverage to describe the act of an insurance company fooling a customer into believing they have more coverage than they actually do because of the usage of the word “Full” coverage.  Unfortunately, I have experienced many incidents when a potential client may have been under the impression they had Full coverage only to discover through an initial assessment of their case that they actually have “fools coverage”, less coverage than what they were led to believe they had.  As a result, we are forced to turn the client away because they do not have the coverage they need to protect their loss.

To further illustrate this concept let’s say a very common accident occurs such as you are rear-ended and the person who hits you flees the scene.  There are no eyewitnesses or traffic cameras. Your vehicle is a mess and you have some neck pain. You contact your insurance provider stating you have just been a victim of a hit and run and need some help.  A couple of days later you receive a phone call or letter in the mail from your insurance company stating that unfortunately your accident is not covered by the policy you purchased and that you are going to have to pay out of your own pocket for all, or part of the loss.

Your response is, “Wait! I thought I had full coverage. My insurance agent told me I was buying full coverage.” Well, you did and you didn’t. Your insurance company begins to use fancy language saying you do not have Uninsured and/or Underinsured Motorist Coverage on your policy.

Scratching your head yet? A lot of people usually do by this point.

So what is full coverage then? A true full coverage policy would cover you in the event of a hit and run accident or in the event the person who hit you does not have very good insurance or does not have insurance at all. It also would cover your passengers or cover you in other special circumstances such as if you got hit as a pedestrian, etc. This policy will also cover your medical expenses and compensate your pain and suffering.  Now you may need to pay a deductible to fix your vehicle depending on the coverage you do buy, but you’re not out thousands of dollars to fix your vehicle, you may be able to get a rental and go see a doctor too and get those medical bills reimbursed.