Driving is as much a part of American life as football and apple pie. But unfortunately, it also comes with a range of expenses, from vehicle purchases to gas and maintenance. In addition, you need to have insurance coverage on your vehicle. In most states, there is a legal requirement for a minimum level of coverage, so it’s not something you can just skip.
But do you need to go above the legal minimum requirement? And, if so, is it worth getting full coverage auto insurance? Read on to answer these questions and learn more about full coverage auto insurance.
What Types of Auto Insurance Are Available?
Not all insurance policies are the same, no matter what realm of insurance you are looking into. However, the basic types can be described as follows:
- Liability coverage. This type of insurance is mandatory in most states and covers you only for injury to another person or damage to their property.
- Underinsured and uninsured motorist coverage will cover you if you are hit by another driver who doesn’t have sufficient insurance to cover your auto repair and medical costs.
- Collision coverage. If you are involved in a collision with another vehicle or object, such as a wall or fence, this will pay for damage to your vehicle, minus your deductible.
- Medical payment coverage is mandatory in some states and will help cover the medical expenses of you and any passengers in the event of a collision.
- Personal injury protection is only available in certain states and, as well as medical expenses, will cover you for other costs arising from your injuries, such as lost income or childcare.
- Comprehensive coverage usually covers you for most of the above and will be covered in more detail in the next section.
What Will a Full Coverage Policy Pay Out For?
The name “full coverage auto insurance” suggests that you can be covered for anything, but you should be aware that coverage will vary from policy to policy. However, if a policy doesn’t cover you to some extent for all of the five points mentioned above, it can’t truly be called full coverage auto insurance.
However, what may vary between policies will fall into two areas: deductibles and liability limits. A few policies may have a $0 deductible, but on average, it will fall somewhere between $100 and $500. Liability limits for bodily injury can range over $250k and $500k per accident, while property damage can be covered to around $100. So it’s always worth looking into the small print for your policy to see exactly what is covered.
What is Not Covered by a Full Coverage Auto Insurance Policy?
As mentioned before, some things just aren’t covered by your full coverage auto insurance policy. For example, you are not covered for everyday wear and tear on your vehicle. You may also find yourself out of pocket if the liabilities for an accident go above the limit on your policy.
Another area not covered is mechanical and electrical breakdowns. For example, suppose your engine is submerged in a flood and becomes waterlogged. You then attempt to start it, and your engine is destroyed. Most insurance policies will not cover you for the damage caused, although some insurance companies might include it as an add-on. There are also certain circumstances where you will not be covered for a typical accident.
- If the driver does not have a valid license.
- The driver is under the influence of alcohol or another intoxicating substance.
- The policy is not in force as you have neglected to renew it.
- If damage to the car is caused by war, foreign enemy action, terror attacks, radiation or nuclear material/weapons, mutiny, rebellion, or other hostilities.
- Damage is a result of your own deliberate actions.
- Contractual liabilities. For example, you will not be covered if you have arranged to loan your car to someone else and they damage the vehicle during this time.
How Much Will Full Coverage Auto Insurance Cost?
According to Bankrate, the average cost in the US for full coverage auto insurance in July 2022 is $1,771 per year, compared to minimum coverage costs of $545 per year.
However, this is only an average as the cost of coverage is dependent on a range of factors, including:
- Driver’s gender
- Driver’s age
- Previous driving history—number of driving citations and convictions
- Previous claims
- Geographical location
- Where the vehicle is stored
- Make and model of vehicle
- Modifications to the vehicle
For example, a male 19-year-old driver in a sports car in downtown Chicago will pay considerably more for their full coverage auto insurance than a 45-year-old woman in a minivan in rural Michigan. Full coverage may be out of your financial reach if you have multiple driving convictions and live in a risky area.
Why Full Coverage is Your Best Option
While you can save a bunch of money by taking out the minimum insurance policy required by law, this can be a false economy. For example, an accident with an uninsured driver could leave you with crippling medical bills and unable to cover the cost of replacing your vehicle. Also, if you cause injury to another person or damage their vehicle or property, you could be paying the price for many years or even have to declare bankruptcy.
When you’ve considered these scenarios, it’s clear that full coverage auto insurance is always the best option. If this means the premiums are beyond your means, there are a few options to explore, such as:
- Changing your vehicle for one that’s cheaper to insure.
- Keeping your vehicle in a more secure location.
- Removing any non-standard modifications.
- Adding more security such as an alarm or immobilizer if they aren’t fitted as standard.
- Consider if you can accept a higher deductible or lower liability limit.
You might also be interested in: What is an Auto Warranty and 8 Different Coverage Options