When an insurance agent, lender, or insurer describes full coverage auto insurance, they are likely referring to carrying both comprehensive and collision coverage, as well as liability coverage.
Comprehensive coverage can pay to repair or replace your vehicle if damaged or totaled due to an event out of your control, while collision coverage pays if your vehicle collides with another vehicle or object. Liability coverage pays for damages or injuries you cause to others.
Read on to learn more about full coverage car insurance, including what it is and how to decide if you need it.
WHAT DOES “FULL COVERAGE” MEAN?
“Full coverage” isn’t an actual type of coverage, but instead, is a general term used to describe a policy that combines comprehensive and collision coverage, as well as anything else mandated by your state. Liability coverage, which is mandatory in almost every state, is typically included in "full coverage." Keep in mind, companies that provide auto loans can also have their own rules about the coverage they require.
You may want to consider full coverage if:
- You’re financing a car
- You want financial protection
- You want peace of mind
DO YOU NEED FULL COVERAGE CAR INSURANCE?
Instead of concluding that you need full coverage, ask yourself if you have the right coverage. It can be expensive to pay for every protection offered, and there’s no reason to pay for something that you don’t need. However, make sure you have enough to cover yourself and any other drivers on your policy. When deciding if you need full coverage, consider these factors:
- Premium—If the insurance premium you're paying equals 10% or more of your car’s value, consider a liability-only policy.
- Deductible—If your car has a market value that is less than your deductible, it may not make financial sense to have full coverage.
- Cost to Repair or Replace—Even if your car is paid off, if you don’t have the finances to repair or replace your vehicle after an accident, you may want full coverage.
Work with your insurance agent to review and select which specific coverages are required in your state and the best choice for your circumstances.
HOW MUCH IS FULL COVERAGE INSURANCE?
It will cost more than a liability-only policy, but the cost of full coverage can depend on factors like:
- The year, make, and model of the vehicle being insured
- The auto insurance limits and deductibles you choose
- Your driving habits
- Your age
- Your credit score
- Where you live
Ask your insurance agent about discounts that might be available. In some cases, you can lower your costs if you insure multiple vehicles, your car has certain safety features, or you bundle auto and home insurance.
SHOULD YOU ADD OTHER, OPTIONAL COVERAGE?
If you have a new vehicle, you should protect it. Comprehensive and collision coverage will pay for damages to your vehicles after an accident or incident—in or out of your control. On the other hand, if you have an older vehicle with a low market value, paying for coverage to repair physical damage may not make sense. Optional coverage options you can add include:
- Uninsured/underinsured motorist insurance
- Medical payments
- Loan/lease payoff coverage
- Rental car reimbursement
- Roadside assistance
