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Car insurance isn’t one-size-fits-all. Insurance providers offer different levels of coverage that you can customize to protect you, your family, and your ride.
“Full coverage” is another way to describe a high level of protection for your car in the event someone steals it or damages it in an accident. But before you opt for full coverage, it’s important to determine how much coverage is necessary so you don’t end up overpaying for insurance you don’t need.
Here’s what you need to know about full coverage car insurance:
- What is full coverage car insurance?
- What coverages are included in a full coverage car insurance policy?
- Are there any exclusions to full coverage car insurance?
- How much does full coverage car insurance cost in comparison to other policy types?
- Benefits of full coverage car insurance
- Drawbacks of full coverage car insurance
- How to determine if you need full coverage car insurance
What is full coverage car insurance?
Full coverage car insurance describes a car insurance policy that includes liability coverage and protections like comprehensive and collision insurance. However, there’s no consensus on what a full coverage policy includes. Full coverage may consist of different types of coverage depending on your insurer and the state you live in.
Most states require that each driver has at least liability insurance, which covers bodily injury and property damage to other people if you get into an accident.
However, adding comprehensive, collision, and other protections on top of that liability coverage could help cover your own costs if your car is damaged.
What coverages are included in a full coverage car insurance policy?
Again, there’s no standard definition for what constitutes a full coverage car insurance policy, but in general, the term refers to a policy that includes the following:
- Liability coverage (bodily injury and property damage): Liability coverage helps pay for another person’s injuries and damages to their property if you get into a car accident. Most states require you to have basic levels of liability coverage.
- Comprehensive coverage: Comprehensive coverage protects your own car from theft and other events, such as fire, hail, flood, and vandalism.
- Collision coverage: Collision coverage helps pay for damage to your car if it collides with another object or car.
Your car insurance provider may also provide these common coverage types as part of a full coverage policy, and your state might even require some of them:
- Medical payments coverage or personal injury protection (PIP): Personal injury protection coverage provides medical bill payments or lost wages for you or passengers injured in your car. This coverage is required in some states.
- Uninsured motorist coverage: Uninsured motorist coverage covers damage to your car caused by someone uninsured or underinsured. This coverage is also required in some states.
- Rental car reimbursement: If you can’t use your car while it’s being repaired, rental reimbursement coverage pays you back for temporary car rental costs.
- Roadside assistance: You may get the option to add on roadside assistance, which is a service you can call if your car breaks down on the side of the road.
Are there any exclusions to full coverage car insurance?
While full coverage car insurance provides more protection for your car, the coverage has some limitations. Insurance will likely not cover small dings, dents, and general wear and tear to your car. Insurance will also not handle regular replacements or repairs, such as replacing tires, fixing brakes, or changing the battery.
Your car may also no longer be covered by your policy if you drive across international borders. And if you don’t have rideshare driver coverage, your car insurance may not protect your car if you get into an accident while driving for a rideshare company.
How much does full coverage car insurance cost in comparison to other policy types?
The cost of full coverage and liability-only coverage depends on the coverage limits, your deductible, and other factors like where you live and the type of car you drive.
Below is the average premium nationwide for a liability-only policy compared to the average premium for a combined (“full coverage”) policy with liability, comprehensive, and collision coverage.
|Coverage type||Coverage included||Average annual premium|
|Liability coverage||Bodily injury and property damage to others||$650|
|Full coverage||Liability, comprehensive, collision||$1,204|
|Source: National Association of Insurance Commissioners|
You’ll notice that going with a liability-only policy could save you a decent amount of money annually. But if an accident happens, you won’t have help covering your own repair costs since liability only insures property damage and injuries to others.
If you choose the minimum liability insurance required by your state, also consider that it might not be enough to financially protect you in an accident. In Alabama, for example, you’re required to have just $25,000 in bodily injury per person, $50,000 in total bodily injury per accident, and $25,000 in property damage per accident.
If you get into an at-fault accident and exhaust those coverage limits, you could be on the hook for what insurance doesn’t cover. That’s why the cheapest policy may not be the best, and it’s important to find a policy with coverage limits that fully meet your needs.
Benefits of full coverage car insurance
You’ll want to consider these benefits when deciding between a full coverage car insurance policy and one with fewer protections:
- Fewer out-of-pocket costs: Once the deductible is paid, drivers who have collision and comprehensive coverage receive help from insurance to pay for repairs caused by an accident or natural event.
- Medical expense coverage: Medical bills can get costly if you’re injured, and adding personal injury protection can help you pay for these bills.
- Extra conveniences: A policy that comes with benefits like roadside assistance and car rental reimbursements can be worthwhile if you regularly travel by road or rent vehicles.
Learn More: How Long Do Car Accidents Stay on Your Record?
Drawbacks of full coverage car insurance
Before purchasing full coverage car insurance, consider these disadvantages:
- More expensive premiums: A premium for full coverage car insurance will cost more than a premium for liability-only coverage. But the increased protection and peace of mind could be worth the cost.
- Deductibles may be high: You don’t have to pay a deductible when you have liability-only insurance. On the other hand, car insurance deductibles for collision and comprehensive often range from $500 to $2,000. This means you could still pay a decent amount from your own pocket before the insurance kicks in.
- Unnecessary in some cases: Buying full coverage may not be cost-effective if you drive an old car, as your premium could be higher than your car is worth. Similarly, if you only drive periodically or short distances, a full coverage policy probably isn’t worth the extra money.
How to determine if you need full coverage car insurance
Think about your car’s value when determining if you need full coverage insurance. If your car’s paid off and not worth much, choosing full coverage might not make sense.
If your car is totaled, the cash value payout you receive from the insurance carrier after the deductible could be less than the premium payments you made. In this situation, getting liability coverage only, paying for repairs out of pocket, or junking the car after an accident could make more financial sense.
However, full coverage could protect you from having to shoulder the entire financial burden following an accident if you own a newer, more valuable car. If you crash, your car is stolen, or it’s damaged by Mother Nature, insurance can step in to help you pay.
Disclaimer: All insurance-related services are offered through Young Alfred.