A full coverage car insurance plan typically provides safeguards against physical harm, including collision and comprehensive coverage, alongside the obligatory liability coverage. This merger of coverage offers financial security in events of accidents or damage to your car due to incidents like vandalism or harsh climates.
In addition, if you finance or lease a car, or if your occupation demands it, choosing full coverage might become mandatory. You can also consider extra policy options like medical expenses, roadside assistance, gap insurance, and others. Furthermore, having this coverage is advantageous for car owners searching to prevent significant expenses for repairs. Lastly, full coverage is not mandated by law, but it might be specifically for events where it is mandated necessary.
What Does a Full Coverage Car Insurance Policy Cover?
In various states, a full coverage car insurance policy generally has different types of coverage, such as liability, collision, and comprehensive coverage. However, it’s crucial to comprehend the inclusions of a full coverage policy.
Liability Coverage
In various states, if you are involved in an accident, liability coverage assists in covering the other party’s injuries and property damage expenses. For instance, it might pay expenses like the driver’s medical costs, vehicle and property repairs, lost wages, and legal costs in the event of a lawsuit. Though liability coverage is required in all states, the required minimum amounts differ, alongside bodily liability limits greater than physical damage limits.
Typically, these limits might be lower than the actual costs you would be responsible for in the event of an accident. An increase in limit provides increased security for your assets. Lastly, if a lawsuit results in damages surpassing your coverage limits, you may end up spending much, putting your assets at risk.
Collision Coverage
Collision coverage is typically considered optional unless mandated by your bank or lender during the repayment of a car loan. This coverage covers the expenses associated with repairing your vehicle when you are held responsible in an accident. For instance, if you collide with another car or an immobile object like a light pole or mailbox, collision coverage handles the repair costs.
Comprehensive Coverage
Comprehensive coverage covers repair expenses for your vehicle when the damage arises from causes other than colliding with another car or a stationary object. This includes events such as fires, hailstorms, floods, falling tree branches, glass breakage, collisions with animals, theft, and burglary.
Aside from liability, collision, and comprehensive insurance, a full coverage policy may include additional types of coverage, particularly if mandated by state law. Additionally, a full coverage plan in your state might include:
Uninsured/Underinsured Motorist Coverage
Uninsured motorist insurance (UM) offers protection when the other party involved in an accident lacks car insurance and is legally accountable. It also extends coverage in hit-and-run situations. Underinsured motorist insurance aids in covering expenses when another driver’s insurance is insufficient of covering the costs. However, this results from an accident for which they are financially responsible.
Personal Injury Protection
Personal Injury Protection (PIP) covers medical costs for you and your passengers resulting from injuries in a car accident. Also, it’s mandatory in most no-fault insurance states. PIP can also cover lost wages and certain additional expenses. If you get collided with by a car while biking, walking, or riding in someone else’s car, your PIP coverage might extend to cover these injuries as well.
Medical Payments (MedPay)
This coverage pays off medical costs for you and your passengers in the event of a car accident-induced injury. However, it doesn’t extend to cover some of the additional expenses that Personal Injury Protection (PIP) might cover.
What Does a Full Coverage Car Insurance Policy Not Cover?
It’s essential to comprehend that having full coverage doesn’t imply complete protection against every potential risk. Furthermore, thoroughly check all car insurance options to comprehend the inclusions and exclusions.
However, every policy has exclusions, highlighting the events not covered, such as:
Damage Due to Wear and Tear
You are responsible for covering the costs of damage resulting from regular wear and tear.
Gap Insurance
When the total for a leased or financed vehicle where you owe more than its current value, guaranteed auto protection (GAP) insurance covers the balance. Some lenders or insurers may mandate full coverage to qualify for GAP insurance.
Rental Car Reimbursement
This coverage assists in covering the expenses of renting a car if your vehicle requires repairs due to a covered accident.
Roadside Assistance or Towing
Roadside assistance coverage provides help and reduces associated costs like running out of gas, being locked out of your vehicle, dealing with a dead battery, or requiring assistance on the roadside.
New Car Replacement
When your new car is summed within the initial year, new car replacement coverage ensures that you can replace it with a vehicle of equal value. This eliminates concerns about depreciation affecting your settlement.
How Much Is Full Coverage Insurance?
Incorporating physical damage protection and additional optional coverage will have a higher cost compared to a liability-only policy. The amount varies based on several factors, including the year, make, and model of the vehicle you intend to safeguard, along with the deductible you choose.
Purchasing for a higher deductible can minimize the cost of comprehensive and collision coverage. However, a comprehensive coverage policy may be more budget-friendly than anticipated, due to various car insurance discounts. Lastly, these discounts can assist you in obtaining affordable car insurance with the appropriate coverage for your needs.
When You Don’t Need Full Coverage Car Insurance
Once your vehicle is fully paid off, there is no obligation to maintain full coverage car insurance. At this juncture, it’s your decision to maintain collision and comprehensive coverage.
You might find full coverage unnecessary if:
- The actual value of your car doesn’t warrant the associated insurance expenses.
- Your exposure to the risk of vehicle damage is minimal.
- You prefer covering repair costs independently.
- You would choose to purchase a new car in the event of damage to your current vehicle.
The lender or leasing policy requires evidence that your car is covered by full insurance throughout the loan or lease term. Without this coverage, the lender has the authority to purchase the insurance on your behalf.
Conclusion
When financing or leasing a vehicle, full coverage is usually a requirement. Even after you own your vehicle, having full coverage can be beneficial. Additionally, if your car holds a high value, if you are exposed to elevated risks of damage, or if you simply seek peace of mind.
