Full coverage is a preferred or mandatory form of car insurance coverage. Although car insurance companies may have some differences when it comes to what is included, full coverage insurance typically means that your auto insurance policy includes coverage for damage to your own vehicle as well as coverage for the damages and injuries that you cause to others.
These coverages are known as collision and comprehensive. You can create a full-coverage car insurance policy by adding them. Full coverage in the United States costs on average $1,674 per annum. Although full coverage auto insurance does not exist in all states, lenders and financial institutions will often require proof of coverage if your vehicle is financed or leased.
What is full coverage insurance?
Most states require you to purchase at least minimum levels of liability coverage, and some also require you to carry additional coverages like personal injury protection (PIP) or uninsured motorist coverage. A basic full coverage auto insurance policy includes the coverages needed to protect your finances from the expense of repairing or replacing your vehicle. This is not possible with the minimum liability limits set by the state.
- Bodily injury liability: When you are at fault for an accident and the driver or passengers in the other vehicle sustain injuries, your bodily injury liability coverage could help pay their medical expenses.
- Property damage liability: If you cause an auto accident, your property damage liability coverage is designed to help pay to repair or replace the driver’s vehicle. You are also covered for damage to other property, such as roads signs, fences, or buildings.
- Collision: If you collide with something like another vehicle, a tree or a pole, your collision coverage will help pay to repair or replace your vehicle.
- Comprehensive: Often called “other-than-collision,” this section of your policy covers damage to your vehicle caused by a wide array of situations, including theft, vandalism, storm damage and animal damage.
These are the essential coverages that come with a full-coverage auto policy. Many companies consider optional coverages part of a full-coverage policy. These are:
- Uninsured motorist: If you are hit by a driver who does not have insurance, this option could help pay for your injuries and the injuries of a passenger. You may be eligible to add uninsured motor vehicle property damage depending on where you live. This will pay for damage to your car that is caused by uninsured drivers. Uninsured motorist coverage is required in some states.
- Underinsured motorist: If the at-fault driver doesn’t have sufficient coverage, this coverage will pay for the excess amount you incur and the injuries of your passengers. This coverage may be required by your state.
- Medical payments or personal injury protection (PIP): In some states, you will be required to purchase medical payments or PIP by law. Some states may offer both or one of these coverages. Both cover your medical expenses and the bills of your passengers in case you are hurt in an auto accident. PIP can also pay for lost wages or the cost of certain household services, if you are unable.
- Roadside assistance: This optional coverage is often considered part of a full coverage package. This coverage covers towing, lockout, and tire changes.
- Car rental reimbursement: If your vehicle is not driveable due to a covered loss, this optional coverage could help to pay for the cost of a rental vehicle.
These coverages may be optional but depending on your location, some companies will automatically include them on full coverage auto insurance policies.
What is the cost of full coverage insurance?
The average cost of a full coverage auto policy in the United States costs $1,674 per year. Full coverage is usually more expensive than minimal coverage. This is because it provides additional protections. Full coverage covers both damage to the vehicle and to other people. Full coverage will protect your financial health even though your premium may be higher.
There are many factors to consider when looking for affordable full coverage insurance. How much you pay will depend on the company you choose, where you live, your driving record, and what type of vehicle and coverage you choose.
Insurance company average cost
Car insurance companies consider a variety of personal factors in determining how much you will be charged for your car insurance. These factors include your driving record and the type of car you drive. While full coverage car insurance rates are generally higher than minimum coverage, the cost of full coverage can vary greatly from one company to another. This is why getting quotes from multiple car insurance carriers is one of the best ways to make sure you are paying a competitive price. Below are the rates for Quadrant Information Services’ quoted annual premiums.
Average cost of insurance by state
Auto insurance rates can vary greatly from one state to the next. Nearly half of the states and Washington, D.C. are higher than the national average for full-coverage car insurance.
Is full-coverage insurance worth it?
Although every person’s financial situation may be different, it is often worth purchasing full coverage car insurance. Full coverage is generally recommended if your vehicle is new or relatively expensive, if you do not have the finances to repair or replace your damaged or totaled vehicle or if the likelihood of damage is higher than average, as it could be with a teen driver.
You will most likely need full coverage if you have a lease or loan. Full coverage is required by financial institutions because if you have a loan on your vehicle or a lease, you don’t own the whole car. A bank or other financial institution has at least a portion of it. As you pay down a loan you get more ownership and your lender gets less. Lenders require complete coverage in order to guarantee that you can pay the remaining lien amount if your vehicle is destroyed.
Questions frequently asked
Do all cars require full coverage insurance?
No. No. If you have a vehicle loan or lease, full coverage is not required. To better protect your finances, you might still consider full coverage even if your car is yours.
Which is better, liability-only or full coverage?
It depends on your financial situation and your willingness to take risks. Liability-only coverage can be a good option if your vehicle is paid off and you have the finances to repair or replace it if it is damaged or totaled. Full coverage provides more protection to protect you against a wide range of circumstances, including damage to your car. You can add optional coverages to your full coverage, such as roadside assistance and car rental reimbursement. Talking with a licensed agent to discuss your circumstances could help you select the right coverages.
What length should I keep my full coverage?
It is up to you. You must keep your vehicle covered until your loan is paid off. If you choose to buy your vehicle outright, then you can remove collision and comprehensive coverages. Financial professionals suggest that you switch to liability only if your vehicle’s annual collision and comprehensive coverages exceed 10% of its value. You might consider keeping full coverage if you don’t have enough savings to pay for vehicle repairs or to purchase a new car in the event of total loss.
