State Minimum vs. Full Coverage Car Insurance

May 11, 2018

Full coverage car

You hear the term ‘full coverage auto insurance’ thrown around a lot. It sure sounds good, but it also sounds expensive. Do you really need full coverage, or can you get away with the state minimum? We’ll walk you through the details and you can decide which choice is best for you.

Full Coverage Car Insurance

First, let’s get something straight. ‘Full coverage car insurance’ isn’t technically a type of insurance. Generally, it means car insurance that offers enough coverage to protect you and your vehicle in almost every scenario, whether a parking lot fender-bender or a total write-off.

Full coverage car insurance usually includes a few of the below coverages (depending on your state):

  • Bodily Injury Liability: This covers other people’s medical bills if they’re injured in an accident you caused
  • Property Damage: Similar to bodily injury, but this time for property. If you back into someone else’s car, this will pay to fix their dent
  • Collision Coverage: If you hit another car or object (for example, a tree), this coverage fixes your vehicle
  • Comprehensive: Bad storm wreck your vehicle? Car stolen? Flood? Comprehensive will save the day.
  • Medical Payments: Pretty obvious, it covers your medical bills
  • Personal Injury Protection: Differs depending on the state, but generally covers medical bills and lost wages
  • Uninsured or Underinsured Motorist: If someone hits you who has no insurance or who’s coverage isn’t enough to cover the bills, this will kick in to make up the difference
  • Roadside Assistance, Towing and Rental Car: This brings your knight in shining armor to you at the side of the road, tows your car to a garage and then gives you a rental until it’s fixed

That’s a lot of coverage. Having this full coverage provides peace of mind and financial protection. Of course, the more coverage you get: the higher your premium. If you don’t do your research, you may end up paying hundreds for coverage you never use.

Think about the age of your car, what your health insurance covers and weigh up what you really need. If you have a new car, your manufacturer may have already thrown in a couple of years of roadside assistance. If you’re currently unemployed, you may not need the work loss payments. All things to consider when adding up your package.

State Minimum Car Insurance

State minimum car insurance means a policy that meets the state coverage requirements for you to drive legally. It differs by state, but it usually falls around the $15,000/$30,000 mark. State minimum coverage typically includes:

  • Bodily Injury Liability
  • Property Damage Liability

And that’s it. Depending on which state you’re getting insured in, some may also include personal injury protection or uninsured motorist coverage. If you’re in Florida you don’t even require bodily injury liability, so you really are going bare minimum.

The most obvious benefit of going for the minimum insurance required by your state? It’s the cheapest option. Many insurance companies specialize in offering the state minimum. They keep their prices low and give you just enough to be legal on the roads.

Buying the state minimum insurance is also a lot better than the alternative: driving uninsured. Every state except for New Hampshire requires drivers to carry liability insurance, and there are stiff penalties if you’re caught driving without it. You don’t have to be pulled over to have your insurance status checked. Several states use electronic insurance verification, in which insurance records are checked against motor vehicle registrations.

However, insurance experts warn that having the state minimum car insurance won’t protect you sufficiently in case of an accident. According to the Insurance Information Institute the average claim cost in 2016 was:

  • Bodily Injury Liability: $16,110
  • Property Damage Liability: $3,683
  • Comprehensive: $3,435
  • Collision: $1,748

Keep in mind that these numbers each represent the amount filed for a single claim. In one accident, multiple claims may be filed for damage to the vehicles and injuries to each passenger. Remember: these numbers also are an average. If you hit a brand new Mercedes-Benz or a 7-seater full of injured passengers, you can expect those numbers to shoot up pretty quickly.

If you do cause an accident that injuries multiple people or cars, you may find yourself responsible for paying several thousands of dollars. Don’t think you can simply turn out your pockets and say, “I can’t pay.” The other party can sue you for damages and force you to sell your assets to pay the debt.

Finally, state minimum car insurance is designed to help whoever you damage. It does not include collision or comprehensive coverage, which both cover your car. If your car is stolen, hits a deer, chip a windshield or is totaled: you’re on your own.

State Minimum or Full Coverage Car Insurance?

You want to make sure you’re protected, but you don’t have money to waste on extra insurance. How do you know if the state minimum coverage will be enough?

First, check your state’s minimum liability requirements. These vary quite a lot between states and also may change over time. The requirements appear in a format like this: 25/50/25, which means bodily injury coverage up to $25,000 per person in an accident and $50,000 for all people injured, plus $25,000 for property damage.

As of 2018, Florida has the lowest standard insurance requirements: $0 bodily injury liability and $10,000 property damage liability. New Jersey’s basic plan for young or low-asset drivers (a step below state minimum) goes even lower: $0 bodily injury liability and just $5,000 property damage liability. That’s not going to go very far if you get into an accident.

On the other end of the spectrum, Alaska and Maine have the highest minimum insurance requirements: 50/100/25. When you’re looking at what’s right for you, this may still not be enough.

Once you’ve checked your state insurance requirements, figure out how much you’re worth. Add up the value of your home (if you own it), your bank accounts and any other assets. If you don’t own much besides your 5th-hand car and a Chipotle gift card, the state minimum insurance may be enough for you, because you don’t have significant assets to protect. Depending how much is on that gift card.

In the end, the best way to decide is to do a car insurance comparison. Compare.com lets you get free quotes from multiple insurers for different coverage levels, so you can see how much more you’ll pay for full coverage car insurance.

You might be surprised to find that you can increase your coverage without paying much more. For instance, the Virginia state minimum requirements are 25/50/25. When we looked at state minimum quotes for a single driver with a 10-year-old car and a good driving record, one insurance quote bumped that coverage up to 100/300/100 for just $60 more per year. Check out how much you could save today!

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