There are many different coverage options when it comes to car insurance, and trying to decide which ones you need can get confusing. Many drivers opt for what is commonly called “full coverage insurance”, but what does that mean? Do you really need it? How is it different from liability insurance, or SR-22 insurance, or the many other types you may have heard of? We’re here to help. This guide will explain everything you need to know about full coverage insurance so that you can make the best decision about what you need for your car.
What is "Full Coverage" Insurance?
With what is commonly called “full coverage”, you are usually getting a policy that bundles together these common coverage types:
- Liability insurance covers damage done to other people and other property that you cause. This is usually required by the state, even in no-fault states, in order to legally operate a vehicle on the road. This helps protect you from being personally sued for damage to another person, their property or vehicle, because your insurance will cover it up to the limits on your policy.
- Collision coverage is the type of insurance that pays for your own vehicle if it is damaged in any kind of accident. This means that if you hit a tree or rear end another car, the damage to your car will be taken care of after you pay your deductible. It also means that your car will be fixed should you be hit by a driver with no insurance, if you didn't purchase uninsured motorist coverage.
- Comprehensive coverage is to cover damages to your car that are caused by things that aren’t accidents. For example, if a tree branch falls on your car, or your car is vandalized, comprehensive coverage will take care of the repairs, minus your deductible.
These three coverage types are what most people mean when they say that they want "full coverage," but that doesn't mean that's every coverage available or that every different circumstance would be covered. "Full coverage" can mean different things to different people and insurance companies, so it's important to make sure that you specify the exact coverages you want so you can be sure that your coverage is right for you. Here are some other coverages that you might consider purchasing, in addition to the three that we mentioned above:
- Personal injury protection is the type of insurance that pays part of your medical bills that result from an accident that involved a vehicle. This protects you, rather than your car, so it often covers accidents where you were a passenger or pedestrian. Some states don't have personal injury protection and instead have a similar coverage called MedPay that only covers you for accidents that are your fault, so it's important to get familiar with the options that are available in your state. Your insurance company is a great resource for information on what's available.
- Rental reimbursement coverage is an insurance policy that gives you an allowance for a rental car if yours is being worked on after an accident. This keeps you on the road so an accident doesn't have to disrupt your plans.
- Some companies that finance cars will have special requirements for insurance that includes things like gap insurance, which is an insurance policy that covers the remaining cost on a vehicle if it should be totaled for less than what is owed. If your vehicle is financed, be sure to check with your finance company before purchasing your coverage so you can be sure that you choose the right options.
How Does Full Coverage Compare to Liability Only Insurance?
"Liability only" insurance is the other most common type of auto insurance, and it simply covers the property damage or bodily injury of another person should you be the cause of the accident. This is typically the minimum amount of coverage that is required to register your car and operate it legally, but it won't cover your vehicle or your medical bills if you have an accident.
Other types of coverage that aren’t usually included in a full coverage plan include roadside assistance or towing insurance; death benefit insurance; coverage for custom car parts or equipment that you’ve installed after buying the car; and uninsured motorist coverage, which specifically covers damages and injuries caused by a driver with no insurance.
Who Needs Full Coverage Insurance?
Since the state only requires liability coverage, you'll need to decide if it makes sense for your situation to pay the extra premium to carry full coverage on your vehicle. Here are some questions to help you decide:
- Does your car still have plenty of value? If so, full coverage can protect your investment by making sure you can get it repaired or even replaced if need be. However, once your car loses value to a significant degree, paying for full coverage insurance may not be worth it. You'll have to weigh the current value of your vehicle (don't forget to factor in your deductible!) against the cost of full coverage insurance to decide if it makes sense for you.
- Do you still owe on the car? If so, your bank or finance company will require you to have full coverage, and they may even have restrictions on which deductible you choose. Check with them before purchasing your coverage, because they may have other rules that you'll need to follow. Also consider purchasing gap insurance to help pay off your loan in case your car is totaled while you still owe more than it's worth.
- How often do you drive your car? If you rarely ever drive the vehicle, mostly relying on other forms of transportation, it may not be worth it to you to pay for full coverage. On the other hand, if the reason you do drive your car occasionally is to go long distances, full coverage could protect you while you’re in unfamiliar places.
These questions can help you reveal if you are the kind of driver that could benefit from full coverage. If you have a valuable car that you still owe on, and you drive frequently or go long distances, full coverage is a very good idea for you.
Does Full Coverage Insurance Cost a Lot?
The price of full coverage car insurance can vary a lot by the state, as well as by personal factors like the make and model of the car. Your credit history, age, and other factors will also affect the rate. How high or low your deductible is will change the monthly rate, as well. A very high deductible will lower your insurance payment, but you’ll be stuck paying out more of your own money if you are in an accident, so be sure to weigh your options carefully before deciding to reduce coverage to save money.
Is Full Coverage Insurance Worth It?
The bottom line is that, yes, full coverage is probably the right choice for you if you have a vehicle that you want to protect, and your finance company will require it if you still owe on the loan. If you want to find a full coverage policy that works for your budget, you can get a fast and easy quote from Freedom National right here. Learn more about how we can help you stay safe on the road.
