Do I Need Full Coverage Auto Insurance?
Full coverage insurance gives you one of the highest levels of protection you can get when driving, so it’s a good idea. But the answer will depend on your unique needs (if you have a car loan) and how much coverage or financial protection you need to feel like it is enough coverage. When you are considering which auto insurance policy to purchase, you’ll want to make sure you have the best information so you can choose a plan to fit your unique needs and budget.
What is Full Coverage?
People toss around the phrase “full coverage” when talking about car insurance. What it actually means is a combination of coverages, including comprehensive insurance, collision insurance and liability car insurance. If you take out a loan from a financial institution to finance your vehicle, your lender will almost certainly require you to carry full coverage car insurance until you have paid off the car. Full coverage is a misnomer, however, since your carrier will still expect you to pay your deductible amounts and will only cover you up to your coverage limits.
You also won’t be able to walk into an insurance company and buy full coverage. Since it is comprised of (at least) three different coverages, you will need to buy them separately. However, most agents are savvy enough to understand what you are asking for when you say full coverage.
If your car is fully paid off, you can choose to carry comprehensive insurance or collision insurance – or both or neither. When it isn’t required by a lender, these basic types of insurance become optional. In many cases, however, you’ll need to purchase both, since some insurance companies won’t offer one without the other.
The other part of full coverage is liability car insurance. Almost every state requires a minimum level of liability in order to be legal when driving on its roads.
So, you won’t have a choice when it comes to liability – unless you live in New Hampshire, which doesn’t require its residents to carry liability car insurance. Make sure you have the proper information about your state’s minimum requirements laws to understand how much coverage is needed.
Here is some more information about the three coverage types that make up what we generally mean by full coverage.
1. Liability Coverage
Most states require a minimum amount of liability coverage. Essentially, if you cause a car accident in an at-fault state, it covers the medical expenses and/or property damages to the other driver(s), their vehicle and their passengers. If an accident happens in a no-fault state, your liability kicks in to help pay for your injuries and physical damages, regardless of who is at fault. In an at-fault state, your liability will never pay for your injuries and damages even if you are not at fault, which means you will be paying for those costs out of pocket if you only carry the basic required liability and the other driver either has no liability insurance or not enough.
Liability consists of two parts: bodily injury and property damage. Most state laws require a certain amount of both of these coverage types to help pay for the medical bills and vehicle or other property damage resulting from a crash.
Given the costs of car repairs and hospital bills today, many drivers feel that the minimum state-required liability is not enough to protect them in the event of an accident. You have the choice to increase those amounts or add additional coverage, such as collision, comprehensive and other optional types.
2. Comprehensive Auto Insurance Policy
Comprehensive covers almost anything that happens to your vehicle other than a running into something (except an animal). It provides protection against things like weather events, natural disasters or problems caused by falling objects, such as rocks and tree branches. Comprehensive coverage may also pay for destruction resulting from fires, broken windshield, vandalism and should cover you if your vehicle is stolen.
Even though comprehensive will cover you if you collide with an animal and have vehicle harm or medical needs, it’s the only situation where you are covered for hitting something under comprehensive. Mostly, it covers items that are outside of your control.
There are some things that comprehensive doesn’t cover, including:
- Hitting another vehicle or object
- Normal wear and tear, such as belts and hoses, brakes, tires and windshield wipers
3. Collision Insurance Coverage
Collision coverage pays for repairs to your car if you are involved in an accident with another vehicle or an object under a covered loss. Because the state-required minimum liability may not be enough coverage to cover the repairs to your vehicle, this can kick in to help – especially in an at-fault state where you won’t get any money from your auto policy. This will not cover someone else’s vehicle, theft or vandalism, hitting an animal, floods or other weather-related events and falling objects, such as a tree limb.
Are Any Other Coverages in a Full Coverage Auto Policy?
They may be – or may not be. It’s really up to you – and your lender – what your policy consists of in terms of varying coverage types. There are numerous “optional” add-ons, including:
- Gap – Some lenders may require gap at the beginning. This product helps to “bridge the gap” between what you owe on your ride and the actual cash value if it is a total loss. If what you owe is greater than the ACV, your gap coverage will pay the balance.
- New Car Replacement – Like it sounds, this product will replace your auto with the same make and model if your vehicle is stolen or is declared a total loss. You can only get this add-on when your car is new.
- Roadside Assistance – The emergency service that steps in when you need help, either to supply gas, open the doors if you are locked out, fix a flat, do minor repairs or tow you to a service station.
- Uninsured Motorist Coverage – Some state laws require this, but if you live in one that doesn’t, you should check into it. For a cheap price, this product protects you if you get hurt or your ride gets damaged in a wreck with someone who is not carrying any liability insurance.
- Personal Injury Protection (PIP) and Medical Payments Coverage (MedPay) – Again, these are sometimes required and sometimes not. These kick in to help pay for medical bills, as well as other costs such as lost wages, when you are injured in a car accident.
- Rental Reimbursement – Helps pay the cost for a rental vehicle when your car is in the shop for an extended period.
There are other available coverage types you can review with your insurance agent to decide if you need them or not.
How Much Does a Full Coverage Auto Insurance Policy Cost?
The national average is $1,655 per year – or about $138 per month. This figure varies widely based on the state you live in (and even what zip code you live in), and personal factors including your driving history (most important) and your age.
In Nevada, the average cost for full coverage is $2,246. In Georgia, it is $1,982. So where you live has an influence, but if you’ve had dings on your driving record, you’ll most likely be paying more than someone with a clean driving record and no claims.
Finding Affordable Car Insurance Online is Easy
Knowing that full coverage insurance means different things to different people, understanding the various types of coverage offered will help you explore your options as you create your own full coverage policy for your specific needs and budget. A Freeway agent can help you decide what’s best for you.
Now that you have a better understanding of full coverage insurance, maybe it’s time to upgrade or replace your current plan. Freeway offers the most affordable car insurance quotes from a wide assortment of policies from the top insurers of the nation. Get a free quote online or call us at (800) 777-5620 to save big on quality coverage. You are also welcome to stop in one of our convenient locations.