Getting into a car accident can be a financially devastating event if you don’t have adequate insurance coverage. Repairing or replacing a damaged vehicle, covering medical bills, and paying legal fees quickly add up. That’s why it’s essential to understand what full coverage car insurance entails and if it’s the right option for you.
What is Full Coverage Car Insurance?
There is no standard legal definition for the term “full coverage” when it comes to auto insurance. It’s more of an informal phrase used to reference a policy that combines several key coverages beyond just basic liability. These additional coverages help provide protection against physical damage to your vehicle and some costs not directly caused by a collision, like theft or vandalism.
Standard full coverage auto insurance generally includes these core protections:
- Liability insurance: Covers injury or damage that you cause to others with your vehicle when an accident is your fault. This coverage is mandatory in nearly every state but does not provide protection for your own vehicle repairs.
- Collision insurance: Covers repair or replacement costs if your vehicle collides with or overturns due to hitting another car, object or as a result of rolling over.
- Comprehensive insurance: Protects against vehicle damage from non-collision-related events like theft, vandalism, flooding, fire or impacts with animals on the road.
- Uninsured/Underinsured Motorist Coverage: Provides protection if you’re hit by a driver with no auto insurance or insufficient coverage to pay for injuries or vehicle damage they caused.
- Personal Injury Protection (PIP): No-fault medical coverage to pay for injuries to occupants of your vehicle, without respect to who was at fault for an accident.
Many full coverage policies also include add-ons like rental car reimbursement, roadside assistance and gap insurance, which covers the difference between what your vehicle is worth and what you still owe if it’s totaled.
Why Choose Full Coverage Car Insurance?
The main reason drivers opt for full coverage over basic liability or minimum required insurance is the broader scope of protections. Having insurance that covers collision damage, theft, vandalism and more provides greater peace of mind and puts you in a better place financially if the unthinkable happens.
Full coverage is also often required if you have an outstanding auto loan or lease. Lenders want to guarantee that your asset – the vehicle – retains value or can be replaced if severely damaged, so you may have no choice but to carry a more comprehensive insurance policy and list the lender as an additional interest on your policy.
Additionally, full coverage protects your personal assets. Without comprehensive and collision coverages included in your policy, you’d likely have to pay thousands out-of-pocket if your car was totaled or to make major repairs after an accident – expenses that could severely strain your household budget.
What Full Coverage Does Not Cover
It’s important not to assume full coverage equates to every potential situation being insured. Nearly all policies – including full coverage ones – have exclusions and limitations on payouts.
For example, standard policies usually do not provide coverage if you or another driver operating your insured vehicle causes an accident while intoxicated. Using your vehicle recklessly or for illegal activities like drug dealing can also invalidate protections.
Additionally, insurers usually place caps on amounts paid for medical bills, lost wages due to injuries and car rental reimbursements when a vehicle is out of commission. Make sure to discuss gaps in coverage and policy caps with your agent.
What Does Full Coverage Cost?
Adding collision, comprehensive and other protections beyond basic liability increases premium costs but how much depends on factors like:
- Type of vehicle – Sports cars, large SUVs and luxury makes cost more to insure than standard sedans and economy vehicles.
- Your driving record – Drivers with accident claims and traffic violations pay higher rates.
- Where you live – Insurance premiums vary a lot between states and even neighborhoods based on accident frequency and cost of vehicle repairs/medical care in the region. Cities have the highest premiums.
On average, full coverage costs about 47% more per year than minimum liability-only policies – averaging $1,763 annually according to 2021 stats. However, the broader protections against financial loss full coverage provides makes it worthwhile for many vehicle owners.
Getting the Right Amount of Coverage
The level of coverage that constitutes “full” protection varies for every driver based on the value of their vehicle, extent of assets vulnerable in a lawsuit and ability to pay for repairs and medical bills out-of-pocket.
Liability insurance minimums also fluctuate widely between states from as low as $10,000 in property damage coverage in Florida to unlimited personal injury coverage required in Alaska, for instance.
It’s important to discuss your financial situation openly with agents to determine what coverage limits provide sufficient protection without overspending on unneeded extra coverage. Higher deductibles that put more potential out-of-pocket costs on you also help reduce premiums.
The Bottom Line
While no auto insurance policy can guard against every potential loss scenario, full coverage insurance provides robust protections for your vehicle and personal assets while also meeting minimum liability requirements. Just be sure to understand exclusions and coverage gaps that apply to your particular policy.
