Full coverage car insurance refers to having all the major components of car insurance, including Bodily Injury and Property Damage, Uninsured Driver, PIP, Collision, Comprehensive, and Bodily Injury. Typically, you are required to have at least half of these coverages. The whole package is known as “Full coverage”, and some people choose it for greater financial protection. We will discuss in detail what constitutes full coverage and why you should get it even if you don’t need it.
Liability insurance is the first part of the full coverage
Liability insurance covers damage you are responsible for or cause to another driver, their car, or any other vehicle. This is the only type of car insurance you are legally required to have. The two main types liability insurance include bodily injury (BI), and property damage (PD). Bodily injury covers injuries that you cause to drivers, and property damage is damage to other vehicles or structures. You and your car are not covered by either coverage.
These two coverages are the most basic form of car insurance that you can have. Each state has a minimum coverage, which can be written in three numbers like 25/50/25. The first two numbers are your BI coverage. The first number is for the person who is injured in an accident. The second number is for the total accident. The third number refers to your property damage liability coverage.
The minimum coverage required by each state is usually between $10,000 and $50,000. Liability is not the most affordable component of car insurance, but it is certainly not the least expensive. It will likely cost less than $100 to double your bodily injury limits each year. PD insurance costs less to increase coverage but is slightly more costly than BI.
Uninsured/underinsured motorist BI and PD insurance
Uninsured BI and PD, functions exactly as BI and PD coverage, except it is only used in the event you get into an accident with a driver without car insurance, who was found to be “at-fault”. You would normally file a claim through your other driver’s insurance. You would file through your Uninsured Motorist coverage, as they don’t have any. In the event that the other driver doesn’t have enough insurance to cover your expenses, the Underinsured motorist BI or PD is used. You would first file for reimbursement up until the limits of the other driver, then you would use your Underinsured motorist to cover the rest.
Part II of the full coverage: First-party benefits
There are many types of insurance that make up first-party coverage. First-party benefits coverage can be optional for most states. Although it is generally more expensive, the biggest benefit is that you can use it much quicker for your own injuries and medical expenses.
Personal Injury Protection
Personal injury protection insurance can be compared to BI for your injuries. You can file your own personal injury protection insurance to cover your medical costs if you are injured in a car crash. PIP pays regardless of fault. This is the main advantage. PIP can overlap with your health insurance and is often used as an additional protection and complement.
In 12 states, you are required to carry around Personal Injury Protection (PIP), while in the other 38, it is optional. PIP in mandatory states generally makes them more expensive for car insurance. Our Florida sample driver paid $25-$90 more per year for PIP. However, it should be noted Florida has one of the lowest PIP limits among the states that it is mandatory. The state limits will determine how much you pay. For example, in Michigan, you may have to purchase unlimited PIP. The annual cost could be as high as $4,000
MedPay is basically the same as PIP insurance but it is not required in every state. MedPay is an optional coverage that is mostly redundant in “no fault” states, but it can be extremely important in states where the PIP limit is low or PIP is costly.
Comprehensive and collision insurance
You can think of collision insurance as PIP for your car. Regardless of who is at-fault, you can file through your collision insurance to repair any damage to your car caused by an accident. Your car can be repaired immediately, as you don’t need to wait for the insurance company to pay.
Collision insurance has the disadvantage that it can be the most expensive part of car insurance, sometimes accounting for more than half of the total cost. The price of collision insurance will go up for cars with high values. You can reduce the cost of your collision premium by choosing a high-deductible policy. The deductibles range from $50 to $2,000 in most cases. Your premium will be lower the higher your choice. Although collision insurance is not required by law, if you lease your vehicle, the leasing company might require you to have it.
Comprehensive coverage is the same as collision but it covers only damage to your vehicle that was caused by outside causes. These events are colloquially called “Acts of God” and include a branch falling onto your vehicle, vandalism to your vehicle, or a baseball hitting your windshield. These events are almost always unavoidable. Comprehensive coverage is much cheaper than collision. This may be due to the fact that comprehensive claims are typically smaller than collision. You can control the price by increasing or decreasing your deductible.
The total cost for full coverage car insurance
Because of the inclusions of PIP/MedPay and collision insurance, full coverage insurance can be significantly more costly than basic coverage. We got a quote for a 30-year-old male driver from New York, to show how each individual component breaks down in price. For this quote, full coverage (not including PIP since that is mandatory in New York) cost 86% more and added an additional $251 per six months, or $502 for the year.
To see the differences in costs between full and basic coverage, we looked at five cities. The cost to get full coverage in every city was more than twice that of the state’s minimum coverage.
Massachusetts’s full coverage cost nearly three times that of basic coverage. Do you think it is worth paying so much for coverage that you are not required by law?
You should have full coverage
If you choose to only have liability insurance, and not the full coverage, it can lead to a lengthy, uncertain claims process. You will need to deal with another insurer. Filing a claim through an insurer of another person can increase the chance that your claim will not be approved or that you have to settle for less than you would like. Filing through an insurer means you will need to prove who is at fault. This can sometimes be hard to do depending on where you live. But, even if you can get complete coverage at a high price, is it worth it if something is unlikely? The short answer to that question is yes.
From 2004 to 2013, the average collision case was $3,144, while the average comprehensive insurance claim was $1,621. This means that you could suffer damages of up to $3,100 if you are involved in an average collision. If you were also the at-fault driver, you will be responsible for paying those damages. You may lose your ability to get to work if your car is your primary means of transport. In 2014, the average car accident cost more than $60,000 in medical expenses.
It is a risk to hope that another person’s insurance will cover the full amount. It can take several weeks to receive payment for medical bills if your insurance company is not the same as your own. With PIP, you can be certain that you are covered up until a certain amount. Payments can be made as soon as the claim is filed.
How to make full coverage more accessible
Although full coverage can be expensive, it is possible to get lower rates. There are many things you can do to save money on your annual bill. First, you can lower your deductible for collision and comprehensive coverage. As we have already mentioned, the higher your deductible is, the more you’ll pay each month. You might be able to increase your monthly payments by putting aside money in your savings account.
Next, make sure to apply for any discounts that you might be eligible for. There are many reasons insurance companies offer discounts, and large ones have more than 20. Whether you’re a proven safe driver, a good student, have taken a drivers education course, or you can bundle your car policy with another insurance policy, the combined discounts can save you well over 20% on your yearly bill.
Shop around is the best and most cost-effective way to get full coverage. Quotes comparison shopping can save you thousands every year on your car insurance bill. There are many companies that compete for your business in any given area. They will most likely have a price difference of several hundred dollars. You will never know if you are getting the best car insurance if you are not comparing quotes from several companies. You don’t have to look hard to find a company that offers a lower price than others in your area. We’ve always found one.
