If you're looking for car insurance, you've probably heard the phrase "full coverage" as a recommended or required type of coverage. Although car insurance companies may differ in their inclusions, 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 you cause to others.
You can create a full coverage car insurance policy by including these coverages, known as comprehensive and collision. Full coverage in the United States costs an average of $1,674 per year. While full coverage auto insurance is not required by law in any state, financial institutions usually require it if you have a loan or lease on your vehicle.
What is the definition of full coverage insurance?
Most states require you to carry at least the bare minimum of liability insurance, and some also require you to carry additional coverages such as personal injury protection (PIP) or uninsured motorist coverage. A basic full coverage auto insurance policy includes all of the coverages you need to protect your finances from the cost of repairing or replacing your vehicle. State minimum liability limits are ineffective for this purpose.
Bodily injury liability: If you cause an accident and the driver or passengers in the other vehicle are injured, your bodily injury liability coverage may pay for their medical expenses
Property damage liability: If you cause an auto accident, your property damage liability coverage is designed to help pay for the driver's vehicle to be repaired or replaced. Damage to other people's property, such as road signs, fences, or buildings, is usually covered as well.
Collision: If you collide with another vehicle, a tree, or a pole, your collision coverage will assist you in repairing or replacing your vehicle.
Comprehensive: Also known as “other-than-collision,” this section of your policy covers damage to your vehicle caused by a variety of circumstances, such as theft, vandalism, storm damage, and animal damage.
A full coverage auto policy includes the following basic coverages. Many businesses, however, consider some optional coverages to be part of a full coverage policy. These are some examples:
Uninsured motorist coverage: If you are hit by a driver who does not have insurance, this coverage may help pay for your injuries as well as those of a passenger. Depending on your state, you may also be able to add uninsured motorist property damage, which will cover damage to your vehicle caused by uninsured motorists. Uninsured motorist coverage is required in some states.
Underinsured motorist coverage: This coverage is intended to pay the excess amount for your injuries and those of your passengers if the at-fault driver does not have enough coverage to cover the entire amount. This coverage may be required by your state.
Medical payments or personal injury protection (PIP): Medical payments or PIP are required by law in some states. In other cases, one or both of these options may be available. If you are injured in a car accident, both can help pay for your medical bills and those of your passengers, regardless of who is at fault. PIP also assists in compensating for lost wages and the cost of certain household services if you are unable to perform them.
Roadside assistance: This optional coverage is frequently included as part of a complete coverage package. It covers towing, lockout services, tyre changes, and other situations that could leave you stranded on the side of the road.
Car rental reimbursement: If your vehicle is rendered undriveable as a result of a covered loss, this optional coverage may help cover the cost of a rental vehicle.
Although these coverages may be optional in your area, some companies will automatically include one or more on a full coverage car insurance policy.
What is the cost of full coverage insurance?
A full coverage auto policy in the United States costs an average of $1,674 per year. Full coverage car insurance is typically more expensive than minimum coverage car insurance due to the additional protections it provides. However, full coverage protects your finances more because it covers damage to both the other party's vehicle and your own. This means that, while your premium may be higher, your financial health will be better protected with full coverage.
There are several factors to consider when looking for low-cost full-coverage insurance. The company you choose, the state you live in, your driving history, the type of vehicle you drive, and the coverage limits and deductibles you select will all have an impact on the amount you pay.
Is it worthwhile to purchase full coverage insurance?
Everyone's financial situation is unique, but full coverage car insurance is often worthwhile. Full coverage is generally recommended if your vehicle is new or relatively expensive, if you lack the financial means to repair or replace your damaged or totaled vehicle, or if the likelihood of damage is higher than average, as it may be with a teen driver.
Furthermore, if you have a loan or lease, you will almost certainly be required to have full coverage. Financial institutions require full coverage because you do not fully own your vehicle when you have a loan or lease on it — a bank or other financial institution owns at least a portion of it (as you pay down a loan, you own more of the car and your lender owns less). As a result, lenders require full coverage to ensure that you can pay off the remaining balance of your lien if the vehicle is totaled.
Is full coverage insurance required for all cars?
No. Most states require drivers to carry at least minimum levels of liability coverage, and some states also require additional coverages such as PIP or uninsured motorist coverage. Full coverage is only required if you have a loan or lease on your vehicle. Even if you own your car outright, full coverage may be a good idea to better protect your finances.
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