Looking To Buy A Car? You May Be Wondering What Full Car Insurance Coverage Covers…
Buying a new car can be exciting—especially if you are purchasing a vehicle for the first time.
There are many things that you will need to consider when buying your car and insurance is one of those factors.
When it comes to auto insurance, your lender or car dealer may ask you to get full coverage car insurance before you are able to apply for finance or even drive the car away from the dealership.
You may now be wondering about full coverage car insurance and what it entails.
Full coverage car insurance refers to a combination of car insurance coverages that can provide you with financial protection if you are involved in an accident.
This type of car insurance can also help you financially if your car is damaged by other events, such as fire, or if your vehicle is stolen.
Although full coverage car insurance is not required by law, it may be required under certain circumstances.
Knowing what is included in a full coverage car insurance policy can help you decide whether this type of insurance is worth considering.
In this article, we will take an in-depth look at full coverage car insurance, what it includes, and how it can be beneficial to you.
What Is Full Coverage Car Insurance?
Full coverage car insurance is a general term that lenders, financiers, and car dealerships use to describe a car insurance policy that includes certain insurance coverages.
While it is not really a specific type of car insurance coverage, it is a way to talk about a selection of coverages that will protect you financially if you are involved in an accident.
What Does Full Coverage Car Insurance Include?
There is only one coverage that is mandatory, and that is liability insurance. On the other hand, when it comes to the following coverages, these are all optional:
- Comprehensive and collision coverage.
- Uninsured motorist coverage.
- Medical coverage.
- Rental reimbursement coverage.
Let’s take a closer look at what these insurance coverages include.
Liability insurance
Liability insurance offers you financial protection if you are at fault in an accident.
All states, with the exception of New Hampshire, require car owners to have a minimum amount of liability car insurance.
These minimum state requirements include two types of liability insurance. These are:
Bodily injury liability coverage
This insurance covers the medical expenses of another driver and their passengers if you are at fault in an accident.
Property damage liability coverage
If you have a car accident that causes damage to another person’s property, this insurance cover will pay for those damages.
These types of damages could include someone’s mailbox, wall or fence—or any other stationary object.
Here Is an Example of How Liability Coverage Insurance Works: Let’s say that you cause a car accident that results in damage to the other driver’s car, as well as some injuries to the driver and his or her passengers. The other driver would be able to make a claim against your liability insurance for car repairs and medical expenses. Your liability coverage would also pay for your legal defense, settlements, and judgment costs if the other driver sues you. |
It is important to note that your own liability insurance will only pay others for damage that you cause. It will not pay out anything for your own car or your injuries.
If someone else causes the accident, then you have the right to claim from their liability insurance.
Their insurance will only cover you up to the policy’s minimum liability limits, which is why it is good to have some additional cover to protect you financially in the event of an accident.
Collision insurance
Collision insurance will pay for any damages to your car that are the result of a collision with another object—such as a vehicle, pole, tree, or wall—or an animal such as a deer.
Comprehensive insurance
Comprehensive coverage pays for any damages to your vehicle resulting from incidents other than a collision. This can include falling objects, fire, vandalism, and theft.
Let’s Take a Look at How Collision and Comprehensive Insurance Works: If, for example, your car skids on ice and you crash into your neighbor’s fence, collision coverage would pay for the repairs to your vehicle. Liability coverage, on the other hand, would pay for the damage to your neighbor’s fence. If you were to drive into a flooded area, not realizing the depth of the water, comprehensive coverage would pay for flood damage to your car. |
Remember, liability insurance coverage is usually sold separately from comprehensive and collision coverage.
If you own your car outright, then you may not need comprehensive and collision coverage.
However, if you have your car on a loan or a lease, you will likely require collision and comprehensive coverage.
What about my deductible?
In an insurance policy, a deductible is the amount that you will pay out of pocket before your insurance company will pay out the rest of the claim.
When it comes to deductibles, there is no deductible on a liability coverage claim. But you will be looking at a typical deductible of between $500 and $2,000 for collision and comprehensive cover.
It’s important to note that the higher your deductible, the lower your insurance premium. The lower your deductible, the more your insurance company will need to pay out in the event of a claim, which results in a higher premium.
Medical payments coverage / personal injury protection
Medical coverage or medical payments coverage is also known as personal injury protection (PIP).
These coverages can help pay for your medical bills and those of your passengers if you are involved in an accident.
The state that you live in will determine which coverages are available to you, and will have different rules about who and what exactly are covered.
Uninsured / underinsured motorist coverage
This insurance coverage helps protect you financially if you are involved in an accident with someone who does not have any liability insurance.
Underinsured coverage helps to bridge the financial gap between the cost of the accident and the limit that the other driver has purchased.
This coverage applies when they don’t have enough cover to pay for accidents that are their fault.
These coverages are entirely optional but can help cover your injuries after an accident where you are not at fault, or help pay for damages to your car.
Rental reimbursement coverage
Rental reimbursement coverage provides you with a rental car while your car is at the repair shop after an accident.
This insurance will usually either cover you up to a set limit, or pay out a dollar amount per day for a specific number of days. This amount will be decided by your insurance company.
Who Needs a Full Coverage Insurance Policy?
If you have financed your vehicle and still owe money on your car loan, your financer may require you to have a full coverage policy in place.
You may also need a full coverage policy if you lease your car. This is because your lender, or lessor, technically owns your car until you either pay off your loan or your lease agreement ends.
Because of this, they have a vested financial interest in your car, and will want to make sure that it can be repaired properly if it is damaged in an accident.
If you are in the position where you make a monthly payment on your car, be sure to read the contract carefully to see whether or not you are required to carry full coverage insurance.
Apart from that, having full coverage auto insurance is completely optional.
If being at fault in a car crash would make you suffer financially, then full coverage is definitely worth discussing with your insurance provider.
If your car is either fully paid off, old, or not worth much, or if you decide liability insurance coverage alone serves your purposes, then you can comfortably drop the additional coverages such as collision and comprehensive insurance.
Is Full Coverage Car Insurance Worth It?
A full coverage auto insurance policy will ensure that you have enough insurance to financially protect your assets in the event of a major crash, collision, or accident.
As with any financial decision, there are pros and cons to having full coverage auto insurance. These include:
Pros:
✅ Will help you meet state, lender, or lessor requirements.
✅ Will protect you financially if you are in an accident and the other driver doesn’t have coverage.
✅ Can cover non-accident related damages such as vandalism and theft.
✅ Can cover your medical expenses if you are hurt in an accident.
Cons:
❌ Will be more expensive than basic liability insurance coverage.
❌ Does not cover normal wear and tear on your vehicle.
❌ Does not cover you if you use your car for commercial purposes.
Why Full Coverage Is a Good Idea
In the event of an accident where you are not at fault, the liability insurance coverage of the other party will often not be enough to cover the repairs to your own vehicle or pay for medical expenses.
Filing a claim through another person’s insurer on their liability insurance is also often a long and tedious process, and there is always a chance that your claim may not be approved.
If you are at fault in an accident, your liability insurance coverage will help pay for the damages and medical expenses of the other party, but not your own.
This means that you will need to pay out of pocket for medical expenses and vehicle repairs.
The best way to decide whether full coverage is a good idea is to review the disposable income you have available to you.
You can then evaluate the average cost of an accident claim—which could be around $4,000 for vehicle repairs and $20,000 for medical expenses—and decide whether you are able to cover these costs on your own.
How Much Does Full Coverage Car Insurance Cost?
There is no standard definition of full coverage auto insurance as each policy provides different coverage options, such as those that we have mentioned in this article.
Full coverage car insurance can be expensive if you decide to carry higher limits on your liability insurance than those required by your state.
If you take additional coverages such as comprehensive and collision cover, you will also pay more than someone who takes only the minimum liability coverage.
How to Make Full Coverage More Affordable
Full coverage can be expensive, but there are several things you can do to keep your premiums as low as possible.
The most obvious of these is to raise the deductibles on your comprehensive coverage and collision coverage. This can provide you with significant savings on your insurance premium.
You can also elect to bundle various insurance products, such as homeowners insurance along with your car insurance.
In addition, being a safe driver, taking defensive driving lessons, and being a good student can save you up to 20% on your auto insurance bill.
Lastly, getting comparative quotes is your best approach to getting the best possible premium. To do this, you can head to the top of our page and start this process quickly and easily.
You will be able to learn about your car insurance options and get the best quotes from car insurance companies in your area.
Get Cheap Full Coverage Car Insurance Today with CheapInsurance.com
As we’ve mentioned earlier, comparing auto insurance quotes is essential to make sure you get the best rate possible.
Finding a good insurer can be a time-consuming process. Fortunately, we are here to help you find the insurance coverage that you need—at the best price.
All you need to do is head to the top of this page and enter your zip code. You will find a wide selection of insurance quotes to choose from.
Once you have an idea of the auto insurance premiums that you could be paying, it will be time for you to contact the insurers that are offering you the cheapest rates to get a formal quote.
Getting car insurance should be quick, simple, and stress-free, and you deserve to get the best insurance rates possible.
At CheapInsurance.com, we’ve got you covered!
