TLTR: This article explains how you can obtain cheap full coverage insurance for your car. It also explores the essential basics you should know before you get full coverage car insurance.
Your car is an asset that you need to protect. Whether it’s your daily commute to work or a road trip, your car is, more than likely, an essential part of your life.
Standard car insurance is, of course, much better than nothing. But too few people consider the risks all drivers face that a standard insurance policy cannot cover. That’s where full coverage car insurance comes in.
What Is Full Coverage Car Insurance?
Full coverage car insurance is a collection of policies that cover your liabilities and damage to your car. The policy includes comprehensive and collision insurance as opposed to state-required minimum policies, such as liability coverage.
These policies protect your vehicle against physical damage, whereas liability coverage only protects you against damage caused by other drivers.
Full coverage can also be defined as a policy that protects against uninsured or underinsured motorists. Whatever it covers you for, what’s important is that you purchase the appropriate insurance policies pertaining to your specific situation. What one person considers full coverage may not be the same to another person. It’s largely based on the conditions that are specific to where you live.
For instance, if you live in a city with a lot of highway traffic, such as Miami or Los Angeles, the chances of getting into a collision are greater compared to cities with less traffic, so you should probably look for a policy that provides maximum collision coverage.
Another example: A person living in Florida won’t require coverage that protects their vehicle from icy roads and snow-related damages compared to a person who lives in Minnesota.
What Does It Cover?
Typically, a full coverage policy includes liability, comprehensive, and collision. It can also include uninsured motorists and personal injury protection depending on state laws and requirements.
But the policy is primarily about the inclusion of comprehensive and collision coverage.
Comprehensive insurance covers injuries and damage to your vehicle that results from a variety of occurrences. These include but are not limited to:
- Weather damage (including rain, hail, and snow)
- Falling objects (shattered glass, concrete blocks, construction debris)
- Theft & vandalism
- Accidents that involve animals
Collision insurance covers damage when your vehicle is involved in an accident. Such situations include:
- Crashes with other vehicles
- Being the victim of a hit-and-run
- Driving into stationary objects such as stop signs or light poles due to error or unfavorable driving situations.
Both of these will have deductibles which you need to pay. An insurer will subtract this amount from your coverage when you make a claim. For example, if your collision expenses come to $4,500, and you have a $500 deductible, your insurer will send you $4,000, and you’ll have to pay the remaining $500.
As previously mentioned, full coverage car insurance allows for additional, optional coverage. Along with liability, comprehensive, and collision coverage, full coverage car insurance can include the following:
Personal injury protection (PIP) covers the medical costs for injuries you sustain in a crash that may or may not be your fault. A PIP claim is paid regardless of who caused the accident.
Uninsured motorist coverage covers the cost of property damage and bodily injury in an accident if another driver is at fault and doesn’t have insurance.
Underinsured motorist coverage covers the expenses due to an accident in which the driver at fault has car insurance, but their insurance limits are insufficient to cover the damages.
Note: As reported by Forbes, PIP is optional in Arkansas, Connecticut, District of Columbia, Texas, and Washington. Many states require PIP as part of their no-fault auto insurance laws.
Liability vs. Full Coverage Car Insurance
Liability coverage will protect against claims resulting from bodily injuries to people and property damage. It also covers the legal costs associated with lawsuits for which the insured might be held liable.
It’s important to note that liability coverage doesn’t cover an insured person from intentional damage, contractual liabilities, and criminal prosecution. Some policies that provide liability coverage include workers compensation insurance, general liability insurance and personal liability insurance.
You are not required by law to have full coverage insurance. The majority of states require individuals to have a small amount of liability insurance. But there can be circumstances in which that will not cover your car repairs or personal injuries.
According to the National Safety Council, the estimated cost of motor-vehicle injuries, deaths, and property damage in 2020 was about $47.2 billion. This statistic alone is good reason to consider buying full coverage insurance for your vehicle.
With that in mind, purchasing full coverage car insurance can be a good decision when you:
- Drive in heavy traffic
- Purchase a new or expensive car
- Have an auto loan
- Live in a location with extreme weather and high auto theft rates
- Are unable to repair or replace your car after an accident
Purchasing full coverage car insurance may not be viable for an older vehicle. The coverage will only reimburse you with the car’s cash value if it’s damaged or stolen.
Note: Your auto loan lender will most likely require you to buy full coverage car insurance, because they want to secure their investment.
What It Doesn’t Cover
Even if the policy is named “full coverage car insurance,” it doesn’t cover every conceivable adverse situation your car may encounter. Full coverage insurance policies have certain exclusions, such as:
- Off-road use
- Racing or other speeding contests
- Acts of war
- Nuclear contamination
- Intentional damage
- Using your vehicle for business purposes
- Confiscation by government authorities
- Wear & tear
- Mechanical breakdown
- Custom parts and equipment
- Theft of items from the car
Keep in mind that an insurer can add or remove these exclusions at their discretion. These can be offered as optional coverage based on the individual insurance company. Be sure to consult with your agent and get the necessary details of the coverage.
How Much Does Cheap Full Coverage Car Insurance Cost?
According to the AAA, the overall average cost of owning and operating a new car in 2020 is $9,561. This estimate includes the average cost of gas, financing, insurance, taxes, license, registration, and vehicle maintenance.
The price of full coverage car insurance is dependent upon the following factors:
- Age of the car
- Vehicle history
- Your credit score
- Chosen coverage limits and deductibles
- Frequency of driving
- Your age and gender
An insurer will take these factors into account before giving you a quote.
Generally, a full coverage policy is more expensive on average compared to a standard car insurance policy in any given state. According to Nerd Wallet, the 2021 national average cost of full coverage car insurance is $1,592 per year, or about $133 per month.
When it comes to the price, full coverage insurance is worth it when the current value of your vehicle is greater than the cost of your full coverage and your deductible. Why? Well, if the value of your car is higher than the premium along with your deductible, then it would offset what you have to pay.
The states with the highest full coverage yearly costs are Louisiana, Michigan, and Kentucky. The states with the lowest costs are Maine, Ohio, and Idaho.
|States With the Highest Full Coverage Insurance Cost|
|States With the Lowest Full Coverage Insurance Cost|
How To Get Cheap Full Coverage Insurance for Your Car?
You can get low-cost coverage by shopping around with various insurance providers. Each insurer calculates risk differently, which can result in a difference in the rates. In order to find cheap coverage, you can follow these tips:
- Compare rates with at least three insurance companies and see what each of them offers. It’s important to shop around and explore your options.
- Inquire about discounts with the insurance companies and agents you talk to. Insurers offer discounts for many things, such as getting good grades (for students) or having a good driving record. Consult with an agent for the prerequisites to qualify for discounts on your full coverage car insurance.
- Increase your deductibles and lower the overall cost of your premium. When you pay a higher deductible, your monthly premium amount decreases significantly even before your insurance kicks in.
- Drive cautiously and make an effort to maintain a good driving record. Getting into accidents, speeding, and DUIs will increase your insurance rates. These traffic violations can appear on your record for three to five years. Paying higher rates for your insurance coverage for that duration can be very costly.
- Decreasing your liabilities can help you lower your prices as well. You can opt out of comprehensive and collision insurance to save money on your monthly premiums. But then you wouldn’t have full coverage anymore and you’d be vulnerable to risks.
Finding cheap full coverage insurance depends on your research, driving habits, and how you approach insurers. There is no fixed template that gets you the ideal insurance. Even with proper research there can be moments where you may not qualify for discounts or meet the state requirements for certain coverage. At the end of the day, you know your situation better than anyone, but an agent knows how to cover you in perilous situations.
Did you find this insurance blog helpful? Feel free to leave a comment below and let us know your thoughts.
Frequently Asked Questions
Is full coverage insurance required on a financed car?
Yes. A majority of lenders require you to have a full coverage policy with comprehensive and collision insurance when you have an auto loan. You can drop full coverage once you’ve paid off your loan, but keep in mind that you’re assuming more risk.
Can full coverage car insurance replace a car?
In the event of an accident caused by you, collision coverage should cover the total repair costs for your car. It would also pay out the current value of your vehicle if it is totaled. If another driver damages your vehicle in an accident, then the other driver’s liability would pay for the repairs.
Is it okay to drop full coverage car insurance?
One instance where you might decide against full coverage is when you have an older car. Often, the worth of older cars can be less than your deductible. This would not allow your full coverage insurance to reimburse you financially, should you get into a car accident. In this case, it makes sense to drop full coverage insurance.
January 30th, 2023 · 9 mins read
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