What Is Full Coverage Auto Insurance? Full coverage auto insurance means you have coverage for your own car, not just the other driver’s. It typically combines collision and comprehensive insurance, which pay out if your vehicle is damaged, plus liability coverage, which pays for injuries and damage you cause to others.
What Is Full Coverage Auto Insurance (Explain)
When people talk about “Full Coverage Auto Insurance” they’re often referring to a combination of coverages that help protect a vehicle. But, there’s really no such thing as “full coverage” for your car.
Some coverages (such as auto liability) are required by state law. Others (such as rental reimbursement) may be optional, depending on the insurer and your situation. So, it’s up to you to choose car insurance that fits your needs — making sure your coverage meets state requirements and helps you protect your car.
Generally, full coverage is a combination of different kinds of auto insurance coverage as required by your state or circumstances. This usually includes, at a minimum:
How Does Full Coverage Insurance Work?
Your coverage depends on which policy you choose. Beyond liability coverage, your carrier may offer several options.
Medical Payments and Personal Injury Protection
Medical Payments and Personal Injury Protection are provided at the level set by the states that require it. These coverages help pay the medical costs of you or others who are in the vehicle with you. It may also cover lost wages and other personal expenses related to injuries from the accident.
Uninsured or Underinsured Motorist Coverage
Some states require coverage to protect you in the event you collide with an uninsured or underinsured driver, or if the other driver flees the scene. If that happens, their insurance, if any, may not be enough to pay for medical expenses. Check with your state to see what it requires.
Collision coverage covers damage to your car if you are at fault in an accident, whether your car strikes another vehicle or an object such as a guardrail. It doesn’t cover damage to the other person’s car.
This coverage isn’t infinite. You will choose your coverage limits and the amount you must pay with your deductible, and these amounts will affect your premium. If you bought your car with a loan, your lienholder may require this coverage; otherwise, it’s usually optional.
Comprehensive coverage covers damage to your car that wasn’t caused by a crash, such as fire, theft, vandalism, storm damage, animal damage, or falling objects. Paired with collision coverage, comprehensive insurance helps pay for damage to your car that is outside of your control.
Read More – What Does Comprehensive Car Insurance Cover?
How to Get Full Coverage Car Insurance
Full coverage car insurance can be a package deal made by an insurer consisting of liability, collision, and comprehensive coverage. Normal wear and tear of an automobile – including mechanical breakdowns, tire damage, and electronics malfunctions – is not covered by full coverage car insurance. Full coverage car insurance doesn’t cover items stolen in a break-in (those are covered by renters and homeowners insurance policies), damage related to freezing, or custom parts and equipment.
Before you settle on a policy, investigate how your personal health insurance coverage plays into appropriate levels of coverage. If you have a low insurance deductible, you may not want to pay for large amounts of personal injury related policies.
Why You Need Full Coverage Car Insurance
There are three main reasons to get full coverage car insurance: legal compliance, lender compliance, and financial risk.
1: Legal Compliance
Vehicle owners need to comply with the laws of the state where they reside. Local insurance agents are likely familiar with the state’s regulations, but it’s important to do your own due diligence.
Each state has its own set of insurance requirements regarding which types of policies vehicle owners must have and how high the limits on those policies must be. Most insurance companies tailor full coverage policies to specific states and provide coverage according to local regulations.
2: Lender Compliance
When you borrow money to buy a car, the lending institution will often require you to show proof of a certain level of insurance to safeguard their risk. Letting your insurance lapse or purchasing a policy that doesn’t fulfill this requirement can be cause for the bank to call in the remaining balance of your loan because you have violated the terms of your agreement.
If you are purchasing your vehicle from a dealership and have used the dealership to help secure a loan, they will often require proof of insurance before handing you the keys to the car.
3: Financial Risk
Properly covering yourself with insurance policies helps ensure that a single car accident won’t ruin you financially. If you don’t have proper coverage and you become liable for medical expenses and damages related to an automobile accident, you could quickly go bankrupt. Insulating yourself from financial ruin is one of the smartest things you can do to protect your family.
How Much Will Full Coverage Insurance Cost Me?
Several factors go into determining what you pay for car insurance. In addition to the type and amount of coverage, car insurance companies consider your credit score, age, sex, and driving record. If you’re considered too much of a risk, some insurance companies may not allow you to purchase a policy.
Where you live also affects the cost of car insurance. People living in apartments with mass parking lots or residents who only have street parking present an increased risk of damage to their vehicles, which could result in an insurance payout. Also, states with no ceiling on medical claim payouts, such has Michigan, have higher rates because insurance companies need to have more cash in reserve for settlements and claims.
States where people frequently drive without car insurance, places where there is hazardous weather, cities with a high cost of living, and no-fault states also have high car insurance rates.
Despite vast differences in insurance prices throughout the U.S., overall, pricing is relatively stable, without sharp increases and decreases as the markets change over time, and only slight increases year over year. However, natural disasters can cause insurance rates to quickly skyrocket in a certain region as companies try to regain their losses and risk assessors reevaluate their projections.
When Should I Get Rid of Full Coverage Car Insurance?
Numerous industry experts recommend dropping most comprehensive and collision insurance when a vehicle nears the end of its lifespan. This is because it is likely more expensive to insure the vehicle each year than it would be to repair or replace it. Still, you will want to adhere to state regulations and protect your assets with good liability coverage.
Based on these recommendations, if your car is getting up there in years, you’ll want to drop your full coverage auto insurance policy at the end of its term and instead go with coverage more tailored to your needs.
Who Sells Full Coverage Car Insurance?
Nearly all auto insurance companies – including Geico, State Farm, Allstate, and Progressive – sell full coverage policies or the individual types of policies that, taken together, provide you with full coverage. You’ll want to make sure that all coverage types are available in your area. Also, some companies are willing to bundle your auto, homeowners, renters, or other policies together, saving you money and helping them retain a customer.