Learn what full coverage car insurance is, where to get it, how much it costs, and whether or not you need it.
When shopping for a car insurance policy, you're going to hear a lot of insurance jargon and buzzwords. From deductibles and liability to claims and umbrellas, there's a lot to learn.
One of those terms is full coverage car insurance. This article discusses full coverage car insurance, what it covers, whether or not you need it, and where to buy it.
What is Full Coverage Car Insurance and How Much Coverage Do You Need?
'Full coverage' isn't an actual policy. Instead, it refers to multiple types of coverage under one policy. Think of a full coverage plan as, essentially, really good car insurance. Full coverage always includes the following coverages:
- Liability: If you cause an accident that hurts someone or damages property, liability pays for it. Liability coverage is the cornerstone of an insurance policy. Minimal insurance requirements in every state include bodily and property liability. However, state minimum liability amounts are rarely enough.
Liability coverage is divided into three limits:
Insurers recommend that you buy as much liability as you can comfortably afford. Experts say that a good liability level is bodily injury at $100,000 per person and $300,000 per accident plus $50,000 for property damage.
- Maximum amount for injuries per person
- Maximum amount for injuries per accident
- Maximum amount for property damage
That liability amount is enough for most people. However, if you have considerable assets, you'll want more coverage. Remember, your liability coverage protects you from lawsuits and medical bills. If you own property, for example, you need enough liability to ensure your property isn't seized from a lawsuit.
If you have considerable assets, consider an umbrella policy. It covers costs that exceed your liability limits. It's not difficult for a lawsuit to reach six figures, so it's easy to exhaust your liability limit. Umbrella policies usually start at $1,000,000 and go as high as $10,000,000.
- Comprehensive: Covers damages caused by non-collision accidents. 'Acts of God' like fire, earthquakes, hurricanes, and hail are only covered by a comprehensive policy. Similarly, comprehensive coverage includes theft and vandalism.
Comprehensive coverage is limited to the cash value of the car. It also requires a deductible. The deductible is the amount that you must pay out of pocket before your insurance kicks in. Imagine that you have a $500 deductible and a tree falls on your car. You would pay $500 towards the damages and your insurance would cover the rest.
- Collision: If you cause an accident, liability pays for damages to other people and property. But it doesn't cover damages to your own vehicle. That's where collision coverage comes in. It pays for repairs to your vehicle after an accident. It's especially helpful if you're at fault for the accident.
Ideally, you only need collision coverage when you cause an accident. It's also helpful if you're the victim of a hit and run. If someone else damages your car, their insurance pays for it.
Similar to comprehensive, collision coverage pays up to the value of the car, after your deductible. Picking a deductible amount depends entirely on your needs. Remember: lower deductibles lead to higher premiums.
There are more types of coverage available
As mentioned, liability coverage is required on every car insurance policy. But comprehensive and collision coverage are optional. Adding comprehensive and collision coverage gives you full coverage.
While that constitutes full coverage, there are more coverage forms available. You can also add these types of coverage to your policy:
- Uninsured and underinsured motorist: If driver with little or no insurance hits you, this helps pay for your damages and medical bills. Without it, you're on the hook for those costs.
- Medical payments: As the name suggests, this pays for medical bills resulting from an accident. It covers you, even if you're a pedestrian or cyclist, and your passengers. A car accident can lead to numerous medical bills. A good health insurance plan won't always cover all of the costs.
- Personal injury protection: Medical payments coverage pays for healthcare expenses. Personal injury protection goes beyond that. It covers lost wages, therapy sessions, hired help, funeral expenses, and more.
- Rental reimbursement: Is your car undrivable after an accident? Rental reimbursement pays for a temporary replacement car.
- Roadside assistance: When your car breaks down, you'll need emergency help. Roadside assistance covers towing, battery jumps and replacement, flat tire fixes, gas delivery, and more.
- GAP: Brand new cars depreciate in value the second they leave the dealership. If you finance a brand-new car and total it, you're probably going to owe more for the car than it's worth. Your insurance payout won't cover the amount you owe, leaving you in a hole. GAP insurance covers that gap.
- Customized parts and equipment: Collectors cars with unique parts usually need special coverage. A normal policy doesn't always account for the true value of a collector's car. This coverage pays for damages to stereos, custom bodywork, special paint, rims, and more.
Again, the policy add-ons mentioned above aren't part of standard full coverage. You can think of those as 'extra' full coverage.
What Does Full Coverage Car Insurance Cover?
A standard full coverage plan with liability, comprehensive, and collision covers the following situations:
- Damages and medical bills from accidents you cause
- Damages to your own vehicle from accidents you cause
- Stolen or vandalized cars
- Natural disaster damage to your car
- Hit and run damage to your car
- Damage from falling objects like tree branches and utility poles
- Water damage
What Doesn't Full Coverage Car Insurance Cover?
Liability, comprehensive, and collision coverage does not include the following:
- Car sharing
- Terrorism and war
- Destruction or confiscation from government authorities and police
- Using your car for commercial business
- Intentional damage
- Cars with rebuilt titles
The additional coverages mentioned above like roadside assistance, rental reimbursement, personal injury protection, and uninsured/underinsured motorist coverage are not included as part of a standard full coverage car insurance plan.
Do I Need Full Coverage Car Insurance?
Now that you understand full coverage car insurance, it's time to assess whether or not it's necessary for you.
You should buy full coverage car insurance if...
- You can afford it - Insurance exists to protect your assets. If you can afford higher levels of insurance protection, it's usually not a bad investment. Buying a higher liability limit, especially, is a good choice. If you have large assets, that means you can afford more liability. That also means you have more to lose in the event of a lawsuit from an accident.
- You have a brand-new car - If you have a brand-new car, more insurance coverage is almost always a good idea. If you have a financed car, full coverage is a no brainer.
Why? Imagine you buy a new car for $30,000. If you rear end someone and you don't have full coverage, you're in big trouble. Liability pays for the damages you cause to the other driver, but you pay for damages to your car. If air bags go off, the car will likely be declared a total loss.
However, if you have full coverage, it pays for at fault collisions. In this scenario, paying extra for full coverage would save you $30,000 in the event of a bad accident. And remember: full coverage also pays for natural disasters, vandalism, theft, and animal damage.
- Your car is financed - Similar to the situation above, if you're financing a car, you should buy full coverage car insurance. If your car is totaled, you will still owe the original amount. You'll be making payments on a worthless car. In many cases, lenders require full coverage. Your state's insurance commissioner doesn't require full coverage, but your finance company will.
- You live in a disaster-prone area - Is your neighborhood located in or near a flood zone? Do you live in an area with a high risk of wild fires? Do your neighbors use the term 'hurricane season'? If yes, purchase full coverage. The comprehensive portion will pay for damages related to all common natural disasters.
- Your car is valuable - Full coverage is ideal for valuable cars. That includes new cars, classic cars, collector cars, and more. There's more at stake for high-value cars. Comprehensive and collision coverage is a must-have on these vehicles.
You might not need full coverage car insurance if...
- Your car is old - Most old cars aren't worth much. You might be losing money long-term if you're paying for a full coverage policy for an old car. For many old cars, the car's value doesn't justify the cost of full coverage.
- You have a garage - If you keep your car in a garage, you cut down on lots of the risks that full coverage pays for. That includes bad weather, hit and runs, theft, vandalism, falling tree branches, and more. Parking your car in a private garage might be enough to skimp on full coverage. Of course, you're still at risk when you're driving the car or parking away from home.
- You can't afford it - Simply put: don't buy something you can't afford. That includes insurance. Full coverage is a bit of a luxury. If you're unable to comfortably pay for it, don't buy it.
Do the Math to Find out If You Need Full Coverage
If you're still unsure whether or not you need full coverage, take these steps:
Get a quote for a full coverage insurance plan. Find out how much a year of collision and comprehensive coverage costs. If a year of coverage costs more than 10 percent of your cars value, it may be unnecessary.
According to the III, about six percent of drivers file collision claims every year. Less than three percent of drivers file comprehensive claims per year. Odds are you're won't need to file a comprehensive or collision claim. That's why it's not necessary for everyone.
When considering coverage beyond standard full coverage, do a cost benefit analysis. Roadside assistance, for example, is available for less than $2 per month from certain insurers. Since a single tow will cost you upwards of $100, roadside assistance can be a bargain. The amount you pay out of pocket for a tow could pay for years of roadside assistance. Fortunately, most insurance companies offer roadside assistance.
If you're still unsure whether or not you need full coverage, talk to an independent insurance agent. They can assess your needs and guide you through coverage options.
How Much Does Full Coverage Car Insurance Cost?
Looking for cheap full coverage insurance? Fortunately, it's possible to find an affordable full coverage plan. Of course, the price of a full coverage plan is different for everyone.
The cost of a car insurance policy depends a lot on your personal factors. For example, your car's make and model, the area you live in, and your driving history are some of the factors that determine the cost of your car insurance.
To see how much full coverage car insurance costs, we compared several car insurance quotes from top companies. These quotes are based on a hypothetical driver: a single 30-year-old Seattle man with a good driving record. He owns a 2012 Honda Civic and drives about 10,000 miles a year.
Coverage levels include $50,000/$100,000/$50,000 in liability plus $500 deductibles for collision and comprehensive coverage. Here are the results:
Examples of Cost of Full Coverage Car Insurance
||Liability only (50/100/50)
||Plus comprehensive ($500)
||Plus collision ($500)
||$82.70 (+$8.88 or 12 percent increase from liability only)
||$122.86(+$49.04 or 66 percent increase from liability only)
||$129.74(+$55.92 or 75 percent increase from liability only)
- A policy with only liability coverage costs $73.82 per month
- Full coverage costs $129.74 per month, an increase of more than 75 percent from liability only.
- Adding just comprehensive coverage raises rates by 12 percent. Adding just collision coverage raises rates by 66 percent.
As you can see, adding full coverage raises your rates quite a bit. And it's the collision coverage that is responsible for a majority of the cost. Comprehensive coverage doesn't account for much of the cost of full coverage.
That makes sense, especially considering the III's findings that drivers file more than twice as many collision claims than comprehensive claims. Also, the size of loss for collision claims is about double that of comprehensive claims.
Though they aren't included in a standard full coverage policy, coverages like towing and rental reimbursement don't cost much. Uninsured and underinsured motorist coverage as well as personal injury payments, however, can hike your rates.
Want to find out how much full coverage car insurance costs you? Let us help you compare quotes from multiple insurance companies to find the perfect full coverage policy.
Where to Buy the Best Full Coverage Car Insurance?
Full coverage car insurance is available from nearly every insurance company. According to a customer survey by Consumer Reports, these are the best car insurance companies:
- Amica Mutual
- New Jersey Manufacturers Insurance Company
- Erie Insurance Group
- Ameriprise Financial
- State Farm
- State Auto Insurance Companies
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