Understanding Full Coverage Car Insurance: What You Need to Know
When it comes to protecting your vehicle, understanding the ins and outs of full coverage car insurance is crucial. Each state has its own minimum car insurance requirements, but opting for full coverage can offer better protection. Full coverage car insurance is a general term that means your policy includes liability, comprehensive, and collision insurance. You might choose to add other extras to make your policy even more robust. However, full coverage car insurance also has drawbacks to consider. Let’s unpack how it works, what it covers, and whether or not you need it.
What Does Full Coverage Car Insurance Cover?
Insurers generally don’t offer a “full coverage” insurance option. Instead, drivers build it themselves by adding different types of coverage to their policy. A full coverage policy typically includes the following:
Liability Coverage
Liability coverage covers the cost of injuries to others if you cause an accident. Most states require a minimum amount of liability insurance.
Comprehensive Coverage
Comprehensive coverage covers damage to your car that isn’t caused by an accident. That usually includes weather events, vandalism, and theft.
Collision Coverage
Collision coverage pays to replace or repair your car after a collision you caused.
Extra Coverage You Can Add to Your Policy
Beyond the basics, you might choose to add extra coverage to lock in more protection. Here’s a quick breakdown of coverage many auto insurance issuers offer:
Uninsured/Underinsured Motorist Coverage
This protects you if you or your passengers are injured in an accident caused by an uninsured or underinsured driver. Damage to your car is also covered.
Personal Injury Protection (PIP) Coverage
PIP covers accident-related medical expenses for you and your passengers, regardless of who’s at fault. Some policies also cover additional costs, such as lost wages.
Roadside Assistance
If you’re stranded, roadside assistance can help with lockouts, towing, and more.
Rental Car Reimbursement
This can come in handy if your car is in the shop and you have to lay out money for a rental car.
Gap Coverage
If your vehicle is totaled, gap insurance covers the difference between your car’s value and your outstanding car loan (or what you owe your lessor if you’re leasing).
Car Repair Insurance
This covers things like transmission problems, engine issues, or problems related to electrical systems, but you must meet certain conditions stated in your policy to receive coverage.
Note that some states may have their own laws for which of these extra coverage types you’re required to carry. For example, if you live in a no-fault state, you’ll be required to purchase PIP coverage.
Pros and Cons of Full Coverage Car Insurance
Learn about the benefits and drawbacks of full coverage auto insurance when deciding whether it’s right for you.
Pros
- You’re better protected: Full coverage car insurance offers more robust protection, which can provide peace of mind. It can also reduce out-of-pocket costs if you experience a covered event.
- It may cover medical expenses: If you opt for personal injury protection coverage—and you or your passengers are hurt in an accident—your policy should cover medical bills. That could be a game changer if someone is seriously injured.
- It’s convenient: Adding perks like roadside assistance or rental car reimbursement can make life easier if you run into unexpected car trouble. It can also reduce your financial responsibility if your car breaks down.
Cons
- It’s more expensive: Adding additional coverage will increase your insurance premium. The amount you pay will depend on your level of coverage and factors like your insurer, your age, your driving history, and the type of car you drive. AAA reports that on average, full coverage car insurance costs $1,765 per year.
- You may not need it: Tacking on extra coverage can be pricey—and you may end up never using it all. Like all insurance policies, you’ll need to consider how the benefits and costs fit into your budget.
- It won’t cover everything: Even with full coverage car insurance, some situations may not be covered. For example, car repair insurance does not cover normal wear and tear or problems related to non-mechanical or non-electrical parts.
Do I Need Full Coverage Car Insurance?
Each state in the U.S. has different car insurance requirements and laws, but almost all states require liability coverage. According to the Insurance Information Institute, 80% of all drivers have comprehensive coverage and 76% have collision coverage.
Consider your current situation when deciding whether getting full coverage is right for you:
If You’re Leasing
If you lease a car, the lessor will likely require you to have an insurance policy that includes comprehensive and collision insurance on top of your state’s minimum requirements. Many also require gap protection and higher liability limits.
If You Have an Auto Loan
If you finance a car with an auto loan, your lender will likely require full coverage car insurance. That generally includes comprehensive and collision coverage on top of liability insurance.
If You Own Your Car Outright
You technically only need coverage that’s required by your state. This can vary, but most states have a minimum requirement for liability coverage. Depending on where you live, that could be as low as $10,000 per person and $20,000 per accident for bodily injuries, and $10,000 for property damage. This is known as 10/20/10 liability coverage. However, most experts recommend carrying at least 100/300/100.
Frequently Asked Questions
How Much Is Full Coverage Car Insurance?
The cost of full coverage car insurance varies based on several factors, including your insurer, your age, your driving history, and the type of car you drive. On average, full coverage car insurance costs $1,765 per year.
How Do I Get Full Coverage Car Insurance?
To get full coverage car insurance, you need to build your policy by adding different types of coverage, such as liability, comprehensive, and collision insurance. You can also add extra coverage options like uninsured/underinsured motorist coverage, personal injury protection, roadside assistance, rental car reimbursement, gap coverage, and car repair insurance.
How Do I Save Money on Full Coverage Car Insurance?
To save money on full coverage car insurance, consider shopping around and comparing quotes from different insurers. You can also look for discounts, such as bundling your auto and home insurance policies, maintaining a good driving record, and taking advantage of any other discounts your insurer offers.
When Does It Make Sense to Drop Full Coverage Car Insurance?
It may make sense to drop full coverage car insurance if your car is older and has a lower market value. In such cases, the cost of full coverage may outweigh the benefits. However, it’s essential to consider your risk tolerance and financial situation before making this decision.
The Bottom Line
Full coverage car insurance offers better protection and more comprehensive coverage. That could be useful if you experience a covered event and need to file a claim, but you’ll likely pay more in premiums. Whether it’s right for you will depend on your risk tolerance and financial situation. Shopping around and comparing car insurance quotes can help you find the right policy.
At O1ne Mortgage, we understand the importance of protecting your assets, including your vehicle. If you have any questions or need assistance with your mortgage needs, don’t hesitate to call us at 213-732-3074. Our team of experts is here to help you find the best solutions for your financial needs.
