You may have heard the term "full coverage insurance," but you may not have a full understanding of what it means. This is because the term isn't an industry standard. It actually refers to a collection of car insurance policies that offer comprehensive coverage. Find out what full coverage insurance is and what exactly it covers.
What Is Full Coverage Insurance?
"Full coverage insurance" is an informal term used to describe a car insurance policy that offers a wide variety of coverage options for many different scenarios. Certain types of car insurance, such as auto liability insurance, are mandated by the state. The types of insurance that are required by law typically cover essentials like protection from bodily injury and property damage. However, other types of coverage, such as collision and rental reimbursement, are optional and depend on the policy holder's preferences. Full coverage insurance policies typically have higher premiums than other types of policies.
What Does Full Coverage Insurance Cover?
A full coverage insurance policy provides comprehensive coverage in a variety of situations. Some of the situations that a full coverage insurance policy accounts for include:
- Liability Coverage: These are the essential types of insurance required by law. This includes protection from bodily injury and property damage. The maximum amount of coverage that a car insurance company is required to offer varies by state.
- Personal Injury Protection: This type of coverage will help cover medical bills, and may even help cover other expenses that you might incur while you're on the mend, such as lost income. Some states actually require this type of car insurance coverage.
- Collision Coverage: As the name suggests, collision coverage helps reimburse you for damage caused by a collision with another car or object, such as a telephone pole. This type of coverage does not cover damages incurred to the other vehicle if you are found to be at fault for the accident (this is covered by liability coverage).
- Comprehensive Coverage: This type of coverage provides protection against other types of damage that your vehicle may face, including theft, vandalism, and weather or animal-caused damage.
- Rental Reimbursement Coverage: If your car needs to be repaired and you rent a car to temporarily replace it, rental reimbursement coverage will pay for a certain amount of your rental costs. However, most policies won't cover rental costs indefinitely. Read the specific terms for your policy to understand the extent of your coverage.
- Uninsured Motorist Coverage: This type of coverage helps protect you from other drivers that don't have insurance. If you are injured during an accident and the other driver is at fault, typically their insurance will pay for the medical bills. However, if the other driver isn't insured and you don't have uninsured motorist coverage, you may be stuck paying the bills.
- Medical Payments Coverage: Normally, if the other driver is at fault, their car insurance would help cover the medical bills of you or any passengers in the car. Medical payments coverage allows you to cover these expenses if needed.
How Much Is Full Coverage Insurance?
Because full coverage insurance is so comprehensive, it often costs more than other types of car insurance policies. Based on 2015 data from the National Association of Insurance Commissioners, the average cost of a full coverage insurance policy in the U.S.was around $74 a month. However, there are many different factors that can impact the price of a full coverage insurance policy. Here are some of them:
- Location: Car insurance costs vary depending on where you live. This applies not only to which state you live in, but also what city. Buying a full coverage policy in a larger metropolitan area, like New York City, will come at a significantly higher cost than a more rural area, like a small farm town in Wisconsin. Drivers in urban areas tend to have higher accident rates on average than smaller towns, meaning that insurance rates will be higher overall.
- Driving History: Insurance companies try to mitigate their risk of paying out whenever possible. To increase their cost savings, they take many different factors into account when providing an individual with a premium, including driving history. If you have a lot of speeding tickets, accidents, DUIs, and other blemishes on your driving record, you will need to pay significantly more for a full coverage insurance policy.
- Insurance Carrier: Shopping around for full coverage insurance is important since every insurance carrier offers different rates. It can also be useful to shop around for the best car insurance prices if you believe that you're not getting a fair rate.
- State Law: Some states require more types of insurance coverage by law, while other states have less robust requirements. This means that insurance companies can potentially charge more for add-ons that create a full coverage insurance policy.
How to Get Full Coverage Insurance
Getting full coverage insurance is no different than getting any other type of car insurance. Get a good mix of quotes from different companies -- at least three of them -- and compare to see who offers the best value. Ensure that you request a full coverage policy specifically. Keep in mind that the term "full coverage insurance" isn't actually a policy name. Instead, it will likely be a mix of different policies that simply offer "full coverage." Make sure you specifically discuss each component of the full coverage policy you are quoted for. Comparing not only prices, but also the details of coverage, will help you ensure that you're getting the best deal.
Do You Need Full Coverage Insurance?
A full coverage insurance policy will ensure that you are protected in the most comprehensive way possible. However, it may not be a necessary purchase for everyone. Whether you need full coverage insurance policy or not depends on a few different factors:
- Vehicle Value: If you have a car that is older or has a lot of miles on it, it might not be worth shelling out the money for a full coverage policy. However, if your car is high value, you should consider paying for full coverage.
- Location: The unique risks that your location offers could make full coverage insurance worth the cost. If you live in a high-crime area where theft is prevalent, you may need that type of protection more than others.
- Car Usage: If you are a daily driver, a full coverage policy could be worth your while. If you don't drive frequently or keep your car in storage, don't spring for a full coverage policy.
- Personal Finances: One of the most important questions you should ask yourself before getting a full-coverage policy is "Can I afford it?" Get the most insurance coverage that you can without breaking the bank.