When deciding on whether you need full coverage car insurance, it’s best to first understand what exactly it is and how it works. Let’s say you’ve just purchased a brand-new car and you want to ensure that it is fully protected. Your state has minimum requirements for your auto insurance policy, and if you have a loan on your car or are leasing there may be even more needed coverage.
But, you want the best insurance coverage – that will cover you, your car, and provide the most coverage in case of an accident in which people are injured or property is damaged. Where do you start?
Full coverage isn’t exactly a car insurance coverage that you can buy and set limits on. It’s more a combination of several different types of coverages on top of your standard liability limits. So, what are all the coverages that make up a full coverage policy?
We’re here to guide you through your options and help you find a cheaper car insurance policy along the way.
The Different Types of Full Coverage Auto Insurance
The 6 main car insurance coverages that can help build your policy are:
Uninsured or Underinsured Motorist Protection
Medical Payments Coverage (MedPay)
Personal Injury Protection (PIP)
What is Liability Insurance Coverage?
Liability coverage protects you in the situation where you have caused injury to another driver or to his or her vehicle and/or property. This is the coverage that most states set a minimum requirement to and many drivers associate it as a standard or basic insurance policy. The amount of coverage that the policy will pay out to the driver or parties involved is established through the liability coverage limits.
Liability Coverage Limit Explanation
Coverage limits are displayed through three values, separated by slashes. For this example, we will be using the limits 100/300/100. This stands for $100,000/$300,000/$100,000.
The first number represents the maximum amount of coverage for bodily injury per person; the second represents the maximum coverage for bodily injury for all injuries related to a single accident; the third number represents the total coverage for property damage for a single accident.
These are all payouts to the other party or parties involved in which you are at fault. If property damage or bodily injury costs exceed these limits, then you will be responsible to cover the remaining balance. If you can’t cover these out of pocket costs, you may face further litigation from the other parties involved.
Collision VS Comprehensive: Which Provides the Best Coverage?
When you’re searching for a reliable full coverage policy, the two most important coverages that you’ll be comparing are collision and comprehensive. We’ve noticed that many drivers are confused about what these coverages protect against, and the differences between them. We’re here to help explain!
How Does Your Vehicle Match Up?
We have analyzed rates from 10 of the most popular vehicles in the U.S. to show the price differences between state minimum and full coverage. We compared customer’s rates from state minimum policies against full coverage policies. The standard state minimum coverage varies state by state but for full coverage, we set coverage levels for liability to 100k/300k/100k, comprehensive deductible to $1000, collision deductible to $1000, and $100k of uninsured motorist protection. See how your rates compare.
Top 10 Vehicles Compared: State Minimum Vs. Full Coverage
Make & Model
Dodge Ram 1500
Do You Need Collision Coverage?
Collision Coverage is there to protect your car or truck. If any damages are done to your vehicle due to a rollover or a collision with another object and/or vehicle in which you are at-fault, this coverage can really come in handy. The amount of money that an insurance company will pay out for your car’s damages depends on the value of your vehicle and the deductible you’ve selected. Learn whether a high deductible or a low deductible is right for you.
What is an Insurance Deductible?
When you establish a deductible on your policy, you are telling the insurance company how much you are going to pay out of pocket, per accident, before they are obligated to help. If the damages to your car are $2,000 dollars and your deductible is $1,000, then the insurance company will pay you $1,000 ($2,000 – $1,000). The higher your deductible, the lower your insurance premium will be. The lower your deductible, the higher your insurance premium will be.
How Collision Coverage Works
To better explain how collision coverage insurance works, we’ll go through a quick example. Let’s say that you’re driving down the street and you accidentally crash into another vehicle.
The other driver is injured with $12,000 dollars in medical bills, the other vehicle’s passenger is injured with $24,000 worth of injuries, the other car has $35,000 worth of damage, and your car has $15,000 worth of damages. What coverage will pay out the injuries and damages that occurred and how much?
$12,000 in medical costs for the driver
$24,000 in medical costs for the passenger
$35,000 in property damage
$15,000 in personal property damage
Your Current Policy:
Liability Coverage: 25/50/25
Collision Deductible: $1,000
The Other Driver’s & Passenger’s Injuries
Since the individual medical costs are under $25,000 ($12k & $24k) and the total medical costs are under $50,000 ($12k + $24), these bodily injuries will be covered under liability coverage
The Other Driver’s Vehicle Damages
Your current liability policy only covers you for $25,000 worth of property damage coverage. Since there was $35,000 of damage done, your liability coverage will only pay the maximum limit of $25,000. Unfortunately, this means that you will be responsible for the remaining $10,000. If you don’t have this money, you may be facing the risk of being sued by the other driver.
Your Vehicle’s Damages
Your car has $15,000 worth of damages. With your $1,000 collision deductible, your policy will pay out $14,000 ($15,000 – $1,000).
Do You Need Comprehensive Coverage?
Comprehensive coverage covers all other damages in which you are not at-fault and there is no collision involved. Some of the most common scenarios include:
Something falling on your car (often a tree limb)
Hitting a Deer
The amount of coverage you add to your policy is also set up through a deductible. If a flood destroys your car, your insurer will pay out what your car is valued at minus your deductible. Your deductible amount will directly affect your premium costs so choose wisely when establishing how much protection you need.
Are Comprehensive and Collision Coverage Required by Law?
In short, no. You are not required by law to carry comprehensive insurance or collision insurance. However, if you have purchased a new car or are leasing one, your lien holder may require that you carry these coverages as part of the terms of your agreement with them.
Additionally, both forms of insurance help you to pay for damage to your vehicle if something happens to it, which can be helpful as auto repairs can be expensive, ranging from hundreds to thousands of dollars. Consult your current car insurance policy to determine your current coverage levels or contact your agent to learn more.
Should you Consider Uninsured Motorist Coverage?
One coverage that makes full coverage insurance worthwhile is uninsured motorist coverage, also referred to as underinsured motorist coverage. It protects you from expenses stemming from an accident in which your vehicle was damaged by a collision involving another driver who does not have insurance or lacks sufficient coverage. Underinsured motorist coverage covers the gaps between what a driver with very low or minimal coverage limits can pay and the cost of the damage to your vehicle. This coverage is mandatory in many states.
Coverage limits are also set up the same as liability coverage, establishing maximum dollar values for bodily injury and property damage. If your uninsured motorist coverage limits are 25/50/25, then you will be protected with $25k towards individual bodily injury, $50k for total bodily injuries per accident, and $25k for property damage.
Is Personal Injury Protection (PIP) and Medical Payments Coverage Worth It?
PIP and MedPay are designed to help drivers cover medical costs for themselves and their passengers when an accident occurs. These insurance add-ons will cover your medical bills regardless of who is at fault.
They are both very similar to one another, but one big difference is that aside from covering medical payments, PIP may also help cover lost wages, funeral costs, rehabilitation, child care, and even transportation to your doctor’s appointments.
Is PIP or MedPay Coverage Required?
Currently, there are 14 states that require some form of these coverages. These states include:
$15k PIP per Person
$30k PIP per Accident
$10k PIP Coverage
$10k PIP Coverage
$4.5k Medical Expenses
$900 per mo. for Loss of Income
$25 a Day In-Home Services
$4.5k for Rehabilitation
$2k for Funeral Costs
$10k PIP Coverage
$2k MedPay Coverage
$8k PIP Coverage
PIP – Lifetime of Medical Expenses & Up to 3 Years of Lost Wages
$40k PIP Coverage
$1k MedPay Coverage
$15k PIP Coverage
$50k PIP Coverage
$5K MedPay Coverage
$3k PIP Coverage
Is Full Coverage Auto Insurance Right for You?
We’ve gone through all the options, so the only thing left to do is figure out the level of coverage you need for your situation. With so many coverage types included in a full coverage auto insurance policy, the price can vary greatly from one insurance company to the next.
The best way to make sure you aren’t paying too much is to get quotes from multiple insurers and compare prices based on the same or similar coverages.
Luckily, Compare.com offers just that service. Enter your information only once, receive multiple quotes online, then compare them side by side. If you want to buy a policy based on one of the quotes you receive, our website allows you to purchase that policy directly from the insurer, no additional fees involved and the quotes themselves are free. Save time and money with Compare.com today!