What Does Full Coverage Car Insurance Cover?

You may have heard of the term Full Coverage Car Insurance before and it could deceive you into believing everything is covered by this type of auto insurance. This isn’t exactly true. It does offer more coverage that the state minimum car insurance. However, it may not include every type of coverage you may expect to receive in the event of an accident.

What is Full Coverage Insurance?

The first thing you need to understand is that the definition of Full Coverage Car Insurance can vary greatly between insurance companies.  Although the state sets the minimum insurance requirements, states do not have laws regarding what qualifies as full coverage. Instead, you and your insurance provider put together an insurance package that covers your full insurance needs.

What is Included With Full Coverage Insurance?

Most insurers agree full coverage differs from minimum coverage because minimum coverage is typically third-party liability coverage which only covers the other driver’s injuries and property damages.  Full coverage, on the other hand, pays for some of your damages as well. At a minimum, full coverage insurance typically includes:

  • Liability insurance
    • Bodily Injury Liability – pays for the other person’s medical expenses
    • Property Damage Liability – pays for the damage to the other person’s property
  • Collision insurance – pays to repair or replace your vehicle after an accident
  • Comprehensive insurance – pays to repair or replace your vehicle which is stolen or damaged by reasons not due to a car accident (weather/fire etc)

Types of Insurance That May Not Be Included

Personal Injury Protection Insurance (PIP): Unless the state requires it, your insurer may not automatically include Personal Injury Protection insurance (PIP).  PIP Insurance pays your injury and medical bills in an accident even if you are at fault. Without PIP Insurance, you or your health insurance might have to pay for your own injury and medical expenses.

Medical Payments Coverage (MedPay): Medical Payment Coverage pays for you and your passengers medical bills regardless of fault. There is overlap with PIP above as well as your health insurance. However, if you don’t have PIP, you should consider MedPay given it’s cost. Also, MedPay can pay for your health insurance deductibles.

Uninsured/Underinsured Motorist Coverage: Uninsured Motorist Bodily Injury Insurance covers your medical expenses if you get in an accident with a driver who either does not have liability insurance or has insufficient liability insurance. There is also Uninsured Motorist Property Damage Insurance which covers damage to your vehicle.

Gap Insurance (auto loan/lease coverage): If you still owe money on your car, gap insurance covers the difference between your car’s fair value and the money you owe.  You may need this because both collision and comprehensive insurance only pay up to the fair value of the car. For example, if your car has a value of $15,000 now after depreciation, but you still owe $20,000 on your car loan, you will need gap insurance to cover this $5,000 gap. Furthermore, if you lease your car, the dealership will require you to have this insurance.

Roadside Assistance: Roadside Assistance is typically optional and it includes lock outs, towing, tire changes, and more.  

Car Rental Reimbursement: This optional add-on covers car rental fees if you are in an accident.

How much Does Full Coverage Insurance Cost?

Assuming full coverage insurance includes liability, collision, and comprehensive insurance, the Insurance Information Institute reports that full coverage insurance cost $935.80 annually in 2016. Here is the breakdown:

  • Liability insurance average annual premium: $566.51
  • Collision insurance average annual premium: $342.40
  • Comprehensive insurance average annual premium: $153.32

Full coverage insurance can range from as expensive as $1309.39 in New Jersey to as low as $628.10 in Iowa. A rough estimate is that only having liability insurance which covers the other party’s injuries and damages can save you up to half the $935.80 annual amount above. However, in the event of an accident, you may not have your own medical injuries and damages covered.

Is Full Coverage Insurance Worth It?

Yes, full coverage automobile insurance is worth it.  It helps you recover from an accident with minimal financial damage.  Your insurance should fully cover your medical bills and repair costs in case of an accident. Having the proper insurance can save you from financial turmoil. You and your insurance carrier should put together the full coverage auto insurance package that is right for you.

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