What does full coverage car insurance cover?
In the event of an accident, the full coverage auto insurance covers the car and the driver.
- Liability coverage is a type of insurance that protects you if you accidentally cause harm to someone else or their property. It helps cover the costs of legal expenses, medical bills, or property damage for which you may be held responsible.
- Collision coverage pays for repairing or replacing your vehicle in the event of a collision, regardless of who is at fault.
- Comprehensive coverage covers damage to your car caused by events other than collisions, such as theft, vandalism, natural disasters, and incidents involving animals.
Optional coverages include:
- Uninsured/underinsured motorist coverage protects you if you're involved in an accident with a driver with insufficient or no insurance.
- Personal injury protection (PIP) covers the medical expenses for you and your passengers, regardless of who is at fault.
- Rental reimbursement coverage pay for a rental car if your insured vehicle is in the shop for repairs after a covered accident.
- Gap insurance covers the difference between the amount owed on a car loan or lease and the car's actual cash value if it's deemed a total loss
Full coverage vs liability insurance
Here’s how full coverage auto insurance is different from liability insurance.
| Factors | Liability coverage | Full coverage |
|---|---|---|
| Coverage type | It covers damage to other driver’s car and their property in an accident in which you are at fault | It covers damage to your car from accidents, theft, vandalism, and other non-collision incidents, as well as liability for injuries and property damage to others in an accident. |
| Requirement | Required in most states by law | Optional coverage and not mandatory by law |
| Coverage limit | Offers limited protection focused on third-party | Offers broader protection covering third party as well as your own vehicle |
| Cost | Is generally cheaper than full-coverage insurance | More expensive due to the addition of collision and comprehensive coverage |
Do I need full coverage insurance?
Whether you need full coverage auto insurance or not depends on various factors, including your financial situation, vehicle value, and risk tolerance.
- Vehicle cost - Full coverage insurance might be a good idea if you have a new or high-value car. This coverage helps protect your investment by covering damage to your vehicle, regardless of fault.
- Auto loan or lease requirements - If you financed your car, your lender may require you to carry full coverage insurance until the loan is paid off. This is to protect their interest in the vehicle.
- Driving habits and risks - Full coverage may be more beneficial if you live in an area with a high rate of accidents, theft, or natural disasters. Similarly, if you frequently drive in urban areas with high traffic, the risk of accidents may be higher.
- Age and condition of your car - As your car ages, its value typically decreases. At some point, the cost of full coverage may outweigh the potential benefit. You might consider switching back to liability-only coverage for an older car.
Before making a decision, it's recommended to talk to your insurance agent. They can help you understand the coverage options available, provide quotes, and assist in tailoring a policy that meets your specific needs.
Auto insurance FAQs
Is full coverage car insurance worth it?
Whether full coverage car insurance is a wise investment depends on several factors, and the answer isn't a simple yes or no.
Newer cars, expensive models, or those with a loan attached often benefit from the financial protection of comprehensive and collision coverage included in full coverage.
Even with a well-maintained car and good driving habits, unforeseen events can happen. Full coverage offers a safety net, reducing financial stress if the worst happens.
However, older cars with minimal value might not justify the higher premiums associated with full coverage. Consider liability-only insurance if you can comfortably handle repair costs yourself.
When to drop full coverage on a car?
You can consider dropping a full coverage car insurance policy on your car when its value depreciates significantly, and you're comfortable covering potential repair or replacement costs out of pocket.
